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China said to group state firms as commercial or not for profit
[BEIJING] China has issued new guidelines for state- owned enterprises, splitting them into two main groups - those that are commercially orientated, and others that are focused on not-for-profit operations, people familiar with the matter said.
Commercial enterprises in competitive industries will sell equity stakes to other investors and seek stock listings, while SOEs related to national security will be remain in state control, the people said.
Separately, the State-owned Assets Supervision and Administration Commission - the agency overseeing the government's companies - said the reform guidelines will be released soon. SASAC didn't reply to a fax from Bloomberg seeking comment on the plans.
In the country's largest overhaul of its bloated businesses since the late 1990s, China's various government branches will next start to map out detailed plans that potentially affect tens of thousands of companies with estimated assets of about US$16 trillion. A quicker pace of SOE reform may intensify speculation over which will be reorganized, potentially adding to what's already been a volatile year for stock markets in Shanghai and Hong Kong.
Current state owned-asset supervisors should shift from managing individual enterprises to state capital management, according to people briefed on the proposal.
As part of the reforms, one principal is to enhance leadership of the communist party in the state-owned enterprises, the people said.
JPMorgan Chase & Co estimates there are more than 150,000 SOEs across the country, accounting for 17 per cent of urban employment and almost 80 per cent of the CSI 300 Index in China.
The last time China made a big push to reform its industries was in the 1990s under then-Premier Zhu Rongji. That drive resulted in more than 60,000 business closures and 30 million layoffs, according to JPMorgan.