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Comprehending State-owned companies' function of providing social services (No 5, 2015)


Research team on institutional reform of State-owned assets management, by Wang Jicheng and Yuan Dongming, Institute for Enterprise Research, Development Research Center of the State Council (DRC)

Research Report No 5, 2015 (Total 4690)


The focus of State-owned companies' providing social services is their supplies of water, heat, electricity, and logistics. Another problem is managing retired workers at some old resource-reliant companies. The fundamental reason why the issue of State-owned companies' providing social services has not been properly dealt with for a long time is because the lack of public service in the region where these companies are located, and what's more, many of the State-owned companies also take providing such services as welfare for their employees.

There are three main problems to deal with before State-owned companies can stop providing social services: it is difficult to sort out what the issues are; it is difficult to decide who will pay for those services; and it is difficult to find other social service providers. To help State-owned companies get rid of the responsibility of providing social services, there needs to be a clear awareness of the issue, the supplies such as water, heat and electricity and logistics need to be approached in a market way, and there should be different solutions for different companies. Also, a financial solution where several parties share the expense and market-oriented methods for fundraising is required. If the problem cannot be solved immediately in certain regions, the central government can work with local authorities to create favorable conditions, or the problem can be solved gradually with the government pushing urban renewal or urbanization.