Overview of recent policies on SOE mixed-ownership reforms

Reform of state-owned enterprises (SOE) has markedly accelerated in recent years. The author wishes to briefly sift and sort the policies on the mixed-ownership reform of SOEs under the central government and in key municipalities during the past three years.

Central policies. On 24 August 2015, the Central Committee of the Communist Party of China and the State Council issued the Guiding Opinions on Intensifying the Reform of SOEs (the guiding opinions), setting forth guiding principles for promoting the mixed-ownership reform of SOEs, bringing in non-state-owned capital to participate in the reform of SOEs, encouraging the use of state-owned capital to take equity stakes in non-state-owned enterprises by various means, exploring the implementation of shareholding by mixed-ownership enterprise employees, etc.

On 23 September 2015, the State Council issued its Opinions on the Mixed-Ownership System for SOEs (the mixed-ownership opinions), specifying the tasks for the development of the mixed-ownership system by SOEs in the following five areas: (1) based on the definition and classification of the functions of SOEs, promoting the mixed-ownership reform of SOEs by category; (2) promoting this reform of SOEs by level; (3) encouraging the participation of various types of capital in the mixed-ownership reform of SOEs; (4) establishing a sound governance mechanism for mixed-ownership enterprises and implementing a professional manager system for such enterprises; and (5) establishing lawful and compliant operating rules.

The guiding opinions, as the “top-level SOE reform design”, and its complementary document, the mixed-ownership opinions, jointly constitute the guiding and programmatic documents for the advancement of the mixed-ownership system for SOEs and set forth the overall requirements for the core philosophy of, and the complementary measures for, the development of the mixed-ownership system by SOEs.

Author: Cindy Hu is a partner and Yang Hui is a trainee at East & Concord Partners