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Promoting the Reform and Development of SOEs by Releasing People’s Initiatives(No.43, 2017)


Xiang Anbo, Enterprise Research Institute, DRC

Research report No.43, 2017 (Total 5118) 2017-1-18

Abstract: The key to reform and development of state-owned enterprises (SOEs) is to put the issue of “people” on high priority, respect the objective law for “active assets” to control “passive assets”, and pay equal attention to human capital and state capital so as to promote their effective combination. At the time when the top-level design is basically completed and followed by its implementation, promoting the reform of SOEs especially requires to release the enthusiasm of the people and to stimulate their creative work. The following policy options are made toward this end. 1. The government needs to establish an appeals system for reformers and a professional evaluation system to distinguish those who commit mistakes in making pilot practice without intentions from those who abuse power for personal gains and deliberately break laws and to establish a mechanism for fault-tolerance and error-correction to free reformers of worries. 2. The government needs to promote mixed ownership reform in SOEs compatible with relevant conditions and introduce strategic investors who have more endogenous power and are inclined to become active shareholders. 3. The government needs to send full-time equity directors by way of corporate governance to SOEs to realize the “personalization” of state-owned shareholders, and to adopt a market-oriented approach for SOEs to actively exercise the right of shareholders. 4. The government needs to bring into play and protect the spirit of entrepreneurship in various ways and through integrated incentive measures. 5. The government needs to push ahead with reform based on market-oriented selection of managers in those SOEs with fair market competition.

Key words:reform of SOEs, initiative, market-based reform