Foreign Firms Encouraged to Attend SOEs’ Restructurings

The private and foreign companies are encouraged to participate in the restructurings of the central state-owned enterprises (SOEs).

            Li Rongrong

Li Rongrong, Director of the State-owned Assets Supervision and Administration Commission (SASAC), the State Council (Cabinet) of China, said that the SASAC will continue to promote the adjustments and restructurings of the central SOEs according to the previous plan of reducing the number of central SOEs to 80 or 100 in the year of 2010.

According to the data, there are still 132 central SOEs under the administration of the SASAC. The object is far away from being realized in 2010. Therefore, Li Rongrong emphasized: “We will continue to carry out the plans as scheduled. We should finish this job well in whatever ways. The target can not be changed.”

For the ways of promoting the restructurings of the central SOEs, Li Rongrong said that the best way is not these SOEs’ conducting restructurings by themselves Therefore, different ways should be used. “We welcome the other kinds of enterprises to participate in the restructurings of the central SOEs. The private companies and the foreign companies are both included, only if they can help to improve the efficiency of the SOEs.”

Li Rongrong also pointed out that some central SOEs can be put into the administration of provinces and cities where they are located. In addition, the restructurings can be finished through listing. “Every efficient way is OK!” According to the data from the SASAC, till the end of 2008, the total amount of state-owned assets in China was 18 trillion yuan (USD 2.64 trillion), 80% of which belonged to the listed companies.

Recently, the Chinese government obviously accelerated the adjustments and restructurings of the central SOEs. In September 2009, China National Biotech Group and Sinopharm combined together, pulling up the curtain for the restructurings of the central SOEs. On November 10, China Ordnance Equipment Group Corporation and China Aviation Industry Group together declared to the public that they will conduct a restructuring for Chang’an Automobile Group, following which there will be a wave of restructurings for the central auto companies. The analysts said that the main fields of which the central SOEs’ restructurings will be the industries of energy, aviation, transportation and communication.

In the experts’ opinions, the government encouraged the private and foreign companies to take part in the restructurings of the central SOEs in order to take more capital to reduce the burden of the central government. But they also doubted that how many choices the government will offer for the foreign and private companies. “What kinds of enterprises can have the private companies and foreigners in their restructurings? Is there any limitation on the extent of their involvement?” asked one of them.