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Highlights of policies on reforms of State-owned enterprises

According to the guideline, China’s SOEs will be divided into two categories, for-profit entities and those dedicated to public welfare. The first category will be market-based and stick to commercial operations and should aim to increase state-owned assets and boost the economy. The other is designed to improve people’s quality of life and provide public goods and services.

SOEs should adopt modern enterprise systems. A flexible and market-based salary system will be established. Salaries of SOE employees will be in line with market levels and decided by company performance. SOEs will also hire more professional managers, and improve their personnel management systems.

China will enhance state assets management, which will focus on managing state assets, but not state firms. The country will set up a state assets budget management system, which covers all of the SOEs. It’s planned to raise the state assets dividend payout ratio to 30 percent by 2020, from the current 5 to 20 percent.

In terms of mixed-ownership reforms, the guidelines said the government should introduce multiple types of investors so SOEs can achieve mixed ownership and encourage them to go public. No specific agenda on mixed-ownership reform will be set, but the government will promote it gradually. Non-state firms will be encouraged to join the process through various means, including buying stakes and convertible bonds from share rights swaps with SOEs. SOEs will also be allowed to experiment with selling shares to their employees.