Fewer SOEs in reformed economy
( 2003-11-12 01:00) (China Daily)
Amid a tide of economic restructuring, there will be few wholly State-owned enterprises (SOEs) in the near future.
Following the current trend of mergers and acquisitions with non-State and foreign investors, most SOEs will adopt a shareholding structure and introduce investors, Li Rongrong, minister of the State-owned Assets Supervision and Administration Commission (SASAC), said at a press conference in Beijing yesterday.
As the Chinese Government enhances its ability to monitor the economy, the State's force will gradually decline in economic sectors, he said.
From April to September, SASAC, the central State assets supervisory body, approved the property right and asset transfers of 48 SOEs, involving 22.5 billion yuan (US$2.7 billion) worth of capital and rights.
Among the transfers in the SOEs, those large ones directly supervised by the central government, as much as 83 per cent of the assets were transferred to domestic private firms and foreign investors.
While the government encourages such transfers, the move should be initiated by the enterprises themselves according to market rules, said Li.
The purpose of the growing push towards mergers and acquisitions is to better allocate resources and improve profitability.
The prices of the transferred State assets should also be decided by the market.
However, Li noted that irregularities do exist.
The role of SASAC is to design more standards and rules to ensure transparency, fairness and equity in the transactions.
So far, the commission has proposed regulations on equity transfers of non-listed firms.
This year the SASAC has been working on 13 administrative regulations, which cover authorized management of State-owned assets, property right disputes and evaluation of corporate performance, said Huang Shuhe, a SASAC vice-minister.
The long-expected rules on management buyouts are also being studied.
Next year, another 15 regulations will be drafted, said Huang.
Li made it clear, however, that share transfers of State-controlled listed companies have never ended.
Circulation of State-owned shares and reductions in the ratio of such shares are two different concepts, he said.
The Chinese authorities are still trying to find feasible ways of circulating State shares in listed companies, but no timetable has been set.
Regardless of what form it takes, the endeavour will give fair treatment to all investors and grant them sufficient protection, said Li.
SASAC will hold an international forum on mergers and acquisitions in Beijing next Wednesday and Thursday.
The mergers and acquisitions market in China still has a high potential for growth. So far, that market only accounts for about 5 per cent of foreign investment in the country.
A sound legal framework will speed up the process, experts said.
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