China's SOEs may reintroduce employee shareholding

In the next two years, more than 200 state-controlled enterprises may be getting a new type of shareholder – their own employees, Caixin reports. Using equity to encourage hard work and employee loyalty is common in the private sector and was tried with state-owned enterprises until 2005. But then concerns arose that the government by granting shares was underselling valuable assets – which are, according to the definition of SOEs, owned by all Chinese people – to certain private investors who, the argument went, benefited unfairly. The worries persist today and make the new policy just a “small step” toward reforming SOEs. The policy, announced by the State Council on August 18, fleshes out a guideline on SOE reform passed by the Central Committee of the ruling Communist Party back in 2013.