Shanxi Coal Reforms Show Mixed-ownership Lies at the Core of SOE Overhaul

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The mixed-ownership reform of Shanxi Xishan Coal and Electricity Power has kicked off amidst the convening of China’s Two Sessions, signalling the central government’s commitment to overhaul of the state-owned enterprise sector.

State-owned coal mining giant Shanxi Coking Coal Group has just issued its “Notice Concerning the Mixed-ownership Reform Implementation Measures for Xishan Coal and Electricity Power,” marking the launch of further privatisation of one of its three publicly traded subsidiaries.

Shanxi Coking Coal expects mixed-ownership reforms to “optimise the equity structure via methods including restructuring, new joint-ventures, equity expansions,  equity transfers, the issuance of convertible debt, and cooperation on new projects” as well as introduce “advanced external capital, adjust and optimise the industry structure, and accelerate innovation…achieving healthy and sustainable development.”

Ye Xiaomei (冶小梅), an analyst with Tianfeng Securities, told Securities Daily that the proposed mixed-ownership reforms are the first of their kind in modern China.

“Whether it’s the reform scope or the reform method, the vigour of this round of mixed-ownership reforms for Xishan Coal and Electricity are unprecedented,” said Ye.

Shanxi Coking Coal recently unveiled its mixed-ownership plans, which focus on further reform of subsidiaries at the second-tier level and lower.

Beijing has flagged its strong commitment to further acceleration of SOE mixed-ownership reforms this year, with overhauls of China Eastern Airlines, China Huaneng Group and State Grid Corporation all on the agenda for 2018.

The recent 2018 Government Work Report pointed to the need to deepen reforms of state-owned or invested enterprises, while Huang Danhua (黄丹华), vice-chair of the State-owned assets Supervision and Administration Commission, said that mixed-ownership reforms would remain a vital part of this year’s SOE reforms.

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