China’s State Council has released new guidance outlines for a pilot program aimed at creating a group of state-run investment funds and asset managers, Caixin reports, as the government seeks to introduce reforms to its inefficient state-owned enterprises.
The document offered clarifications to the scope and remit of two types of state asset managers. State capital investment companies have a strategic investment goal in investment targets pertaining to industry development, whilst state capital management companies will aim to generate returns on state-owned capital, the document read.
The pilot program was set up in 2014 with the goal of using equities and debt-to-equity swaps to stimulate SOE reforms. Two years later, the government opened two state asset managers, China Chengtong Holdings and China Reform Holdings, to invest state-owned assets.
This week’s document also picked several SOEs to become equity investors, such as state food entity COFCO, and threatened severe punishments for involved entities that fail to make significant progress with their investments.