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China premier urges "urgent" SOE reform to improve competitiveness

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Chinese Premier Li Keqiang has called for state-owned enterprises (SOEs) to press ahead with mergers and acquisitions to improve their competitiveness and for the disposal of "zombie" enterprises, the official Xinhua news agency said late on Sunday.

[BEIJING] Chinese Premier Li Keqiang has called for state-owned enterprises (SOEs) to press ahead with mergers and acquisitions to improve their competitiveness and for the disposal of "zombie" enterprises, the official Xinhua news agency said late on Sunday.

State-owned enterprises are "in urgent need of reforms as languid mechanism and poor management have resulted in declining profits", Xinhua quoted Mr Li as saying at a meeting on SOE reform last Friday.

China unveiled earlier this month details of how it would restructure its SOEs, including partial privatisation, as data pointed to a cooling in the world's second-largest economy.

The reforms would make SOEs more market-oriented and restructure and dispose of "zombie" enterprises, long-time loss-making firms.

The government manages 111 companies centrally under the State-owned Assets Supervision and Administration Commission, or SASAC. Local governments own and manage around 25,000 state-owned industrial and construction companies and the sector employs nearly 7.5 million people.

Innovation and entrepreneurship should also play a role in the SOE reforms, Mr Li said.

REUTERS