Major state-owned Chinese firms will be encouraged to sell significant stakes of themselves to outside strategic partners, under a new three-year program that marks the latest move in Beijing’s campaign to make the group more efficient and market-oriented, reported Caixin.
“We encourage state-owned, publicly listed holding companies to introduce strategic investors by offering them 5% or even more equity to participate in governance as active shareholders,” said Weng Jieming, vice chairman of the State-owned Assets Supervision and Administration Commission (SASAC), which oversees China’s largest state-owned enterprises (SOEs). He added that non-publicly traded SOEs could sell even larger stakes to similar strategic investors.
Weng made his remarks at a news conference to discuss the new three-year campaign, which will run through 2022 and is part of a drive that Beijing hopes can create world-class companies from its state-run giants. While such companies generally do well in China due to their state support and frequently protected status in their sectors, most are still highly bureaucratic and inefficient in other ways due to lack of major competition, said Caixin.
Weng said the latest program is aimed at boosting the country’s broader “mixed-ownership” reform program that dates back to 2013. That plan also encourages the introduction of outside partners, often specialists from the private sector. Such partners were often also allowed to take small stakes in the company as part of the package, but such stakes rarely came up to the latest 5% threshold.