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China plans to cut number of big state firms to 40
[BEIJING] China will likely cut the number of its central government-owned conglomerates to 40 through massive mergers, as Beijing pushes forward a sweeping plan to overhaul the country's underperforming state sector, state media reported on Monday.
The consolidation will first take place in commercial sectors, especially in competitive industries, said the official newspaper Economic Information Daily, quoting an anonymous authority. "Resources will be increasingly concentrated on large enterprises to avoid cut-throat competition, like what CSR Corp Ltd and China CNR Corp Ltd did when competing against each other for projects overseas," the newspaper said.
The restructuring plan is critical to President Xi Jinping's broader push to raise the performance of China's lumbering state sector, at a time when Beijing struggles to find the right policy mix to support the world's second-largest economy that grew in the first quarter at its slowest pace in six years.
The policy-directed merger of state-owned CNR and CSR, China's top two train makers, created a US$26 billion company able to win global rail deals from rivals such as Germany's Siemens AG and Canada's Bombardier Inc. "SOEs' non-core businesses, particularly in tertiary industry, will be sold publicly on the capital market," the newspaper quoted the authority as saying.
Avoiding the loss of state assets will be "the most important and core requirement" when mergers that involve sensitive assets take place, the newspaper said.
Earlier this month, Beijing committed to stepping up public scrutiny of state firms' financial and performance information as well as changes of enterprise leadership, to increase transparency and fight corruption.
The Central Commission for Discipline Inspection, the ruling Communist Party's top graft-buster, is also intensifying its two-year inspections of state firms in strategic sectors.
In recent weeks, China FAW Group Corp Chairman Xu Jianyi, Baosteel Group Vice President Cui Jian, and a general manager at China National Petroleum Corp were put under investigation for corruption.
Currently, the central government owns 112 conglomerates, including 277 public firms listed on the Shanghai or Shenzhen stock exchanges with a market capitalisation of more than 10 trillion yuan (S$2.14 trillion), according to the newspaper.