Per reporter: Li Keyu Per reporter Per editor: Chen Xu
The two sessions of the National People's Congress will be held in 2020, and what major measures will be introduced in the reform of state-owned enterprises this year is also a hot spot that has attracted much attention.
Recently, the Daily Economic News (hereinafter referred to as NBD) reporter conducted an exclusive interview with Li Jin, an expert on state-owned enterprise reform and a researcher at the Research Center for Large Enterprise Governance and Innovation at Cheung Kong Graduate School of Business.
Li Jin believes that the reform of state-owned enterprises in 2020 has entered a critical historical stage, the reform of state-owned enterprises and the adjustment and optimization of industrial structure constitute the theme, the market-oriented institutional mechanism is the direction, and stimulating the vitality of micro subjects is the purpose.
Many of the core contents of the "Three-Year Action Plan for the Reform of State-Owned Enterprises", which are highly concerned by all walks of life, are also expected to be fully reflected in the spirit of this year's two sessions.
<h2>The Action Plan will set out a roadmap for a timetable for SOE reform</h2>
NBD: At the end of last year, the Three-Year Action Plan for the Reform of State-Owned Enterprises (hereinafter referred to as the Action Plan) entered the public eye. In your opinion, when is the Action Plan expected to be officially launched? What will be the dominant direction? What are the key issues that the programme will focus on?
Li Jin Image source: Courtesy of respondents
Li Jin: The Guiding Opinions of the CPC Central Committee and the State Council on Deepening the Reform of State-Owned Enterprises issued in 2015 clearly states that by 2020, decisive results will be achieved in important areas and key links of the reform of state-owned enterprises. The Central Economic Work Conference held at the end of last year proposed that it is necessary to formulate and implement the "Three-Year Action Plan for the Reform of State-Owned Enterprises" to enhance the comprehensive results of the reform of state-owned assets and state-owned enterprises.
Due to the impact of the epidemic, the publication of the Action Plan has been delayed, which is understandable to everyone. After a lot of research and repeated demonstration, the three-year action of state-owned enterprise reform has formed a preliminary plan.
It can be expected that the next three years will be three years of pragmatic and in-depth development. Judging from the process of promoting reform, this plan should be published in the first half of this year, and I expect it to be published after the two sessions.
At present, the international situation is grim and complicated, and the domestic economy is in the stage of climbing over the hill. The stage of the state-owned economy being greatly affected by the epidemic has come to an end, and central enterprises and state-owned enterprises are expected to play the role of pillars and ballast stones in the future of the "six guarantees".
In response to the actual background, the state will pay more attention to seeking breakthroughs in key areas. It is expected that the Action Plan will focus on key and difficult issues, require the concentration of efforts to overcome difficulties, and even put forward specific requirements on the timetable.
Under the top-level design, if there may be some policies in the implementation process, it will be committed to better promoting the implementation of relevant policies through the plan, and promote the solution of key and difficult problems, especially to effectively solve some shortcomings and weaknesses, so that the comprehensive efficiency of state-owned enterprise reform will be further improved, the governance system of state-owned enterprises will be more mature and stereotyped, and state-owned enterprises will be more dynamic and efficient.
In fact, from the central to the local level, they are planning in advance, and there have been frequent substantive breakthrough actions recently. Although the Action Plan has not yet been promulgated, reform measures such as mixed reform of state-owned enterprises, mergers and acquisitions and restructuring are continuing to advance and have not stopped. Once the Action Plan is promulgated, it means that the goals, timetables and road maps for the reform of state-owned enterprises will be further clarified, and the pace of reform of state-owned enterprises will be further accelerated.
<h2>State-owned enterprises will play a role in maintaining the global industrial chain</h2>
NBD: This year marks the end of the 13th Five-Year Plan and the first year of the Implementation of the Action Plan. In your opinion, in 2020 and the upcoming 14th Five-Year Plan period, what is the main tone of SOE reform?
Li Jin: The Central Economic Work Conference held at the end of last year pointed out: "It is necessary to speed up the reform of state-owned assets and state-owned enterprises and promote the optimization and adjustment of the layout of state-owned capital." The reform of state-owned assets and state-owned enterprises is the logical starting point, and "promoting the optimization and adjustment of the layout of state-owned capital" is the logical end point. In other words, the optimization and adjustment of the layout of state-owned capital is the result and goal of the reform of state-owned assets and state-owned enterprises.
The outbreak of the epidemic in early 2020 has also made the adjustment and optimization of the industrial structure more urgent. The main structural issues to be focused on and solved during the "14th Five-Year Plan" period are: industrial overcapacity, emerging industry development, manufacturing innovation and industrial chain, and optimization of the service industry structure. The driving role of this year's major investment projects is more realistic. At the same time, a number of transformative, traction and landmark measures will be implemented to continuously promote the adjustment and optimization of industrial structure.
State-owned enterprises will play a leading role in optimizing the smooth circulation of the structure and stabilizing growth in 2020 to maintain the global industrial chain and hedge the negative impact of the epidemic.
The Fourth Plenary Session of the Nineteenth Central Committee of the Communist Party of China put forward the five standards of the state-owned economy: competitiveness, innovation, control, influence, and anti-risk ability will be further strengthened. This should be used as a new standard for the reform of state-owned enterprises, replacing the general sense of bigger, stronger and better. During the "14th Five-Year Plan" period, the formulation and implementation of the Action Plan will better implement the new requirements of the Fourth Plenary Session of the 19th Central Committee of the Communist Party of China.
We should also note that the "marketization direction" is clear in the reform of state-owned enterprises. The reform of state-owned enterprises should focus on this direction, stimulate the vitality of micro subjects, and develop in depth.
<h2>Further improve the state-owned assets supervision and control system with capital management as the mainstay</h2>
NBD: The reform of "two types of companies" (state-owned capital investment and operating companies) was a highlight of the reform of state-owned assets and state-owned enterprises last year, how will this reform be promoted this year? What do you expect this year's two sessions of the National People's Congress to say about this?
Li Jin: In terms of policy direction, we will further improve the state-owned asset supervision system with capital management as the mainstay, increase the degree of authorization and decentralization, and effectively play the role of state-owned capital investment and operation companies. The expression "reorganizing and establishing a number of state-owned capital investment companies and forming a number of state-owned capital operating companies" should appear in the spirit of this year's two sessions of the National People's Congress.
The two types of state-owned economic companies are the "bull nose" of the reform of state-owned assets and state-owned enterprises, which are related to the reform that involves the whole body. This year's structural reform will give prominence to the authorized operation system and propose that the establishment of a new batch of state-owned capital operating companies be appropriate. In terms of organizational structure, operating model, and operating mechanism, we should intensify reform, explore new operating mechanisms, and accelerate the formation of a state-owned asset supervision system with capital management as the mainstay and a modern enterprise system with Chinese characteristics.
While the regulatory authorities are transforming their functions, the central enterprises will also take the transformation of the functions of the group headquarters and the improvement of the governance structure of sub-enterprises as the starting point, and take the initiative to authorize and delegate power to the funded enterprises, so as to fully stimulate the vitality of grass-roots enterprises. The headquarters of central enterprises is still the center of reform and the main carrier of reform in the next few years.
Enterprises below the second level of central enterprises and local state-owned enterprises should vigorously promote the tenure system and contractual management of managers on a wider scale, accelerate the establishment of a professional manager system, and actively explore the establishment of a management incentive system and a differentiated salary system that are in line with the market.
Image source: Xinhua News Agency
<h2>Strategic reorganization and professional integration will "connect the stages of good drama"</h2>
NBD: Focusing on building a modern economic system and effectively promoting the strategic restructuring and professional integration of enterprises, do you predict what new actions will be taken by state-owned enterprises this year?
Li Jin: The restructuring and integration of central enterprises is an important measure to accelerate the structural adjustment of the layout of the state-owned economy. I expect that this year, the main business of central enterprises will be redefined, and all enterprises will strictly implement the new version of the negative list of investment projects, strictly control the proportion and investment direction of non-main business investment, and promote the concentration of various resource elements in the main business.
In the future, state-owned capital will be invested more in important industries, key areas and strategic emerging industries. Effectively promoting the strategic restructuring and professional integration of enterprises is the top priority of the 14th Five-Year Plan. Reorganization is mainly in the following forms:
The first is to select industries with a relatively high degree of market competition, low industrial concentration, and prominent overcapacity problems, including resource industries, steel, automobiles, equipment manufacturing, foreign engineering contracting and other fields, and carry out horizontal reorganization of enterprise mergers and acquisitions, thereby reducing the number of enterprises and expanding the scale of enterprises.
The second is to give priority to vertical restructuring of enterprises with significant upstream and downstream synergies. For example, at present, we should actively promote the merger and reorganization of coal, electricity and steel enterprises in industries with serious overcapacity, so as to achieve capacity digestion and compression at lower transaction costs.
The third is to pay attention to the re-integration of internal resources of enterprises. In particular, those large-scale enterprise groups should carry out innovative allocation of assets and organizations according to the organic relationship between business chain and technology chain.
The fourth is external reorganization, central and local reorganization and international reorganization.
Specialized integration of equipment manufacturing, chemical industry, offshore equipment, overseas oil and gas assets, and regional integration of coal power resources are expected to become the focus of this year's work. The restructuring and integration of areas with prominent problems of repeated investment and homogeneous competition is expected to accelerate.
During the "14th Five-Year Plan" period, the strategic adjustment of the state-owned economy will attach importance to reform in areas with natural monopolies.
The natural monopoly industry implements the separation of network transportation according to the characteristics of different industries, and competitive businesses are more to the market. Distinguish between the nature of natural monopoly network links and competitive non-network links, plan and implement them step by step according to the characteristics of the industry, and promote the construction of a competitive market structure and the construction of a fair competition system through "multi-pronged" policy means such as enterprise reorganization, spin-off of competitive businesses, and strengthening industrial control, so that the state-owned economy in monopoly industries will become a more dynamic part of the socialist market economic system. Key areas such as oil, electricity, natural gas, railways, civil aviation, telecommunications, and military industry are the focus of the spin-off of these competitive businesses.
<h2>The focus of mixed reform will change from "mixing" to "reform"</h2>
NBD: For mixed ownership reforms, what new deployments do you expect this year? Will the focus and center of the future mixed reform change to a certain extent?
Li Jin: Actively promoting the reform of mixed ownership and changing the focus from "mixed" to "reform" is the focus of the reform of the Action Plan and the 14th Five-Year Plan.
Obviously, it is necessary to change from "mixing" to "reform," and "reform" is the main thing. The mixed ownership reform of strategic investment, investors not only bring money, but more importantly, bring market factors, good social capital not only brings money, but also should be the source of resources and vitality of enterprises, that is, market factors, which is the main criterion.
In the next step, the hierarchical classification to promote "mixed reform" will pay more attention to the rational design and adjustment of the equity structure, focus on introducing strategic investors with high matching, high sense of identity and high synergy, and explore the establishment of a scientific and efficient differentiated control model.
Through property rights transfer, capital increase and share expansion, investment and mergers and acquisitions, new capital contributions, listing and reorganization (including initial listing and asset restructuring of listed companies, issuance of securities, asset injection, absorption and merger), employee incentives, etc., the implementation of mixed ownership reform, the focus of which has changed from "mixing" to "reform". In the future, the mixed reform of state-owned enterprises will be more and more integrated with industrial reform, such as mixed reform + energy reform, mixed reform + electricity reform, mixed reform + military reform, etc.
On the whole, from the beginning of this year to the "14th Five-Year Plan" period, on the basis of the completion of the phased tasks of the mixed reform of most state-owned enterprises, the focus will be on the reform of the market-oriented mechanism, especially the reform of the medium- and long-term incentive mechanism for employees. Actively and steadily deepen the reform of mixed ownership by stratification and classification, especially to promote the in-depth transformation of the operating mechanism of mixed ownership enterprises, and give full play to the positive role of non-state-owned shareholders.
In addition, during the "14th Five-Year Plan" period, the policy level will also vigorously promote the listing of state-owned enterprises, promote the overall listing of group companies, increase the intensity of market-oriented mergers and acquisitions of listed companies, promote the concentration of state-owned assets in listed companies, and make listed companies become the main organizational forms and important carriers of management capital of state-owned enterprises.
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