Mixed-ownership Reforms of 19 State-owned Enterprises Expected to Draw 300bn Yuan

China’s first two rounds of mixed-ownership reforms involving a total of 19 state-owned enterprises is expected to attract around 300 billion yuan (approx. USD$45.36billion) in capital.

Figures released by central government at the Mixed-ownership System Reform Forum (混合所有制改革论坛) held in Beijing over the weekend indicate that the first two reform trials involve a total of 10 second-tier central SOE’s and 9 third-tier companies, with total company assets of over 940 billion yuan.

Mixed-ownership reforms are expected to add approximately 300 billion yuan in capital to the 19 SOE’s participating in the first two rounds of trials.

China’s State Council has also given its approval to the participation of further 31 SOE’s in a third round of mixed-ownership reform trials, which will cover five sectors including real estate, construction, building materials, telecommunications and mining.

Peng Huagang (彭华岗), vice-secretary of the State-owned Assets Supervision and Administration Commission, said that the pace of mixed-ownership reforms is accelerating and the range of sectors covered is expanding, with some SOE’s already seeing the fruits of reform plans.

According to Peng over two-thirds of central SOE’s have already incorporated some form of private capital, while more than half of state-owned capital is concentrated in listed concerns.

As of 2016 68.9% of central SOE groups and their subsidiary enterprises had mixed-ownership systems, with paid-in capital of 7.6 trillion yuan.

At the central SOE group level a total of three enterprises had mixed-ownership systems, including China Unicom, Alcatel-Lucent Shanghai Bell, and China Hualu Group, while at the second-tier level over 50% of enterprises have mixed-ownership systems.

73.6% of commercial category 1 central SOE’s have mixed-ownership systems, while the figure for commercial category 2 central SOE’s is 62.6%.

When broken down by sector, mixed-ownership enterprises account for 88.3%, 86.3%, 78.3%, 77.9% and 76.8% of SOE’s in the real estate, construction, building materials, telecommunications and mining sector.

During the period from 2013 to 2017 central SOE’s and share-controlled central SOE listed companies engaged in 247 rounds of financing in the form of IPO’s, new share emplacements, preferential stock or convertible bonds.

Share-controlled central SOE listed companies engaged in 67 rounds of restructuring, during the same period to add nearly 500 billion yuan to their balance sheets, while as of the end of 2016 listed company assets, operating revenues and total profits accounted for 63.8%, 61.3% and 70.9% respectively of the central SOE total.

Peng Huagang said that the mixed-ownership trial reform plans for China Unicom and Eastern Airline Logistics had been implemented, while the 10 enterprises participating in the first round of trials had already completed their employee shareholding schemes and changed their industrial and commercial registration.

 

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