Boards to Appoint CEO’s of China’s Central State-owned Enterprises

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The Chinese government has signalled key changes to the appointment process for the CEO’s of the country’s central state-owned enterprises.

On 22 January the official website for China’s State-owned Assets Supervision and Administration Commission (SASAC) announced personnel changes involving 80 executives at a total of 11 central SOE’s.

Domestic media points out that the phrasing used by the official announcement indicates key changes to the CEO appointment process, amidst ongoing reforms to China’s SOE sector that seek to increase their efficiency by making them more market-oriented entities.

While SASAC previously announced the “appointment” (任命) of the CEO’s of central SOE’s, the latest announcement instead makes reference to their “nomination” (提名).

According to state-media SASAC has shifted to the nomination of candidates for the leadership positions of central SOE’s, with the board of directors instead entrusted with the appointment of these nominees.

The move considered a part of ongoing efforts to overhaul and improve the corporate governance of China’s state-owned enterprises by delegating more authority to boards.

“Experts believe that the change is the result of reforms to authorisations for the management system,” said China Economic Net.

“The key to the corporate system implemented by state-owned enterprises is the status and authority of the board of directors, and the focal point for reform of the management system is senior management.

“The appointment of CEO’s by SASAC has now been changed to nomination of candidates, with the authority for their appointment transferred to the board of directors.

“[This] is a major step forward for reforms to authorisations for the management system.”

The latest SASAC announcement makes specific reference to the nomination of Li Maohua (李茂华) as a candidate for the position vice-CEO of Dalian-based electronics manufacturer China Hualu Group, alongside the appointment of Meng Fengchao (孟凤朝) to the position of chair of China Railway Construction Corporation, and Liu Hualong (刘化龙) to the position of chair of Beijing-headquartered rail-equipment supplier CRRC Corporation.

 

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