Precautions against loss of state-owned assets

Mixed ownership reform (MOR) of state-owned enterprises (SOEs) has been a key concern among the political and business communities. This article looks at prevention of loss of state-owned assets in the process of MOR.

For a prolonged period of time, a single ownership structure and a blurred line between functions of government and enterprises have hindered SOEs from establishing a modern corporate system. In recent years, when the Chinese economy saw “L-shaped” growth amid sluggish economic growth across the world and declining demographic dividend, investment and export at home, various obstinate weaknesses of SOEs came to the surface.

The MOR of SOEs is supposed to lead to a meaningful breakthrough in the general reform of SOEs. At macro level, MOR of SOEs is conducive to organic integration between the state-owned sector and the market-oriented economy, driving ongoing development and improvement of micro market players. At micro level, it is expected to work in two ways. First, it will help state-owned capital play a bigger role in achieving value preservation and appreciation, and improve competitiveness. Second, it will drive SOEs to improve their corporate systems.

Author: Yu Juanjuan is a senior partner at AllBright Law Offices