Opportunities for China's State-Owned Enterprises Abound, but Reform Is Key

Reforms at China's state-owned enterprises (SOEs) are accelerating as SOEs prepare to tap opportunities from internationalization and from the country's Belt and Road Initiative.

Both Ma Guoqiang, chairman and party secretary of China Baowu Steel Group Corporation, and Xu Jinghong, chairman of Tsinghua Holdings, said that they face relatively few restrictions in the reform process in terms of restructuring their business and shareholding, and in recruiting and retaining outside talent.

Speaking on a panel discussion on the Future of Big China during the 11^th Annual Meeting of the New Champions in Dalian, Ma said: "We want to accelerate SOE reforms as the Belt and Road Initiative presents opportunities for us." He disclosed that Baowu Steel has long researched opportunities that may arise from the Belt and Road Initiative, including countries like Pakistan that are located along the routes. Under the present round of SOE reforms, the Baowu Group is focused on spinning off companies that are not core to its steel operations, such as its food business.

On the other hand, Xu noted that an important reform issue revolves around asset ownership, and that determination of whether the state or management controls the assets, as well as devolution of decision-making, are critical as SOEs position themselves for the future. He said that there are still "complicated oversight systems" that have to be resolved if the state is to unshackle SOEs to thrive in a competitive environment. "The core of the issue is whether we can stimulate vitality in the SOEs," Xu concluded.