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Policy Options on the Adjustment of State-owned Capital Distribution



By Yuan Dongming, DRC

To adjust the state-owned capital distribution in the future, we should not only give full consideration to such features of state-owned capital as “drifting with the tide” and “seeking profits”, but also establish a policy-making mechanism for adjustment of the state-owned asset capital distribution, and explore effective ways for state-owned capital investment and operation companies to accelerate capital stock adjustment.

I. Main characteristics for adjustment of state-owned capital distribution.

1. State-owned capital is moving towards basic industry, heavy-chemistry industry and social service sectors with a scattered distribution manner.

2. State-owned capital is phasing out in some crucial industries, but still keeps a dominant position in monopolized industries.

3. The headline benefits of the state-owned enterprises have improved to some degree, but still lag behind that of some other businesses, and general state-owned enterprises are losing competitiveness.

4. Policy functions of state-owned capital have not been effectively performed such as providing public services, promoting the integration and adjustment of industries and leading industrial development.

II. Innate mechanisms leading to the above-mentioned characteristics for adjustment of state-owned capital distribution.

1. The investors’ institutions are unable to promote in a proper manner state-owned economic distribution due to the lack of clear ownership policies.

2. The state-owned capital, like other kind of capital, possess the features of “drifting with the tide” and “seeking profits”.

3. Some major industries that were run by state-owned enterprises (SOEs) are now managed by non-SOEs.

4. SOEs have lost advantages in developing emerging industries, and non-SOEs are taking a leading position.

III. Suggestions on adjusting state-owned capital distribution.

1. The operation of for-profit SOEs should become totally liberalized and abandon the function of leading industrial development.

2. We need to explore how to utilize state-owned capital investment and operation companies to accelerate state-owned capital stock adjustment.

3. We need to establish some special state-owned funds and special legal-person-based SOEs and allow them to play a leading role in industrial operations.

4. We need to clarify the sectors to be controlled by state-owned capital with a diversified mode of management.


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