Despite the number of China’s State-owned enterprises (SOE) being greatly reduced after years of overhaul, some structural issues remain.
At present, SOEs account for only 0.74 percent of all registered enterprises in China, and while its layout and structure are rather dispersed, State-owned capital still penetrates almost all sectors, including those face severe overcapacity.
In order to develop the core business and advantages of China’s SOEs and exert their role in the national economy, related departments and authorities should work on further promoting structural adjustment and optimizing economic layout of State-owned capital.
In addressing industrial overcapacity, market exit mechanisms should be established to eliminate “zombie enterprises” or shut down enterprises that fail to perform or operate at a loss.
In addition, related departments should promote the restructuring of the core business of industrial chains, optimizing resources, conducting specialized operations and enhancing efficiency.
Meanwhile, enterprises themselves should intensify their efforts in the adjustment of structures and resources, through quitting non-core assets, or unprofitable assets, and disposing of inefficient or assets that have been idle for a long term.
Moreover, the flow of State-owned capital should also be encouraged by allowing SOEs to dispose of their assets in the capital market through security or equity transaction, and transferring them to industries in need, so as to improve the quality and efficiency of State-owned capital.