Page 102 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
the average debt-to-asset ratio of central SOEs dropped delegated the power of more than 600 administrative
to 66.5 percent, 0.2 percentage points lower than the approvals to lower-level offices, meeting government
level at the beginning of 2017. “The debt risk level at targets ahead of schedule. China has every reason to
central SOEs is reasonable and controllable,” said Huang deepen reform and open wider to the outside. The
Danhua, Vice Chairwoman of SASAC. “Apart from asset country’s development has come to, in the words of Xi, “a
restructuring, central SOEs can also direct their resources new historic juncture.” China now “embraces the brilliant
toward competitive companies or industries through prospects of rejuvenation,”and to achieve that, one of the
equity cooperation, asset swaps, strategic alliances and key tasks is to deepen reform and “get rid of all outdated
joint ventures,” she said. Under the government plan, thinking and ideas and all institutional ailments.” Xi
debt-to-equity swaps will be pushed forward, with announced the Party would “sort through and do
state investment funds encouraged to participate in the away with regulations and practices that impede the
process. Central SOEs will speed up the pace of mergers development of a unified market and fair competition.”
and acquisitions, or M&A’s. To cut the leverage ratio, Xi declared “socialism with Chinese characteristics has
SASAC has also encouraged SOE behemoths to optimize crossed the threshold into a new era” (Wang, Visionary).
capital structure via initial public offerings, and supported
efforts toward asset securitization. Huang said central
SOEs have made headway in cutting outdated capacity,
reining in debt risks and improving competitiveness. So
far, almost 69 percent of central SOEs at all levels have
been involved in the mixed-ownership reform, while 47
percent of local SOEs were also involved, according to
SASAC data (Yu).
In a remarks in a report to the 19th National Congress,
Xi Jinping called for furthering reform of SOEs and
making them “stronger, better and bigger.” He urged
more efforts to improve the systems for managing
different types of state assets, and reform the system of
authorized operation of state capital. “We will further
reform of SOEs, develop mixed-ownership economic
entities, and turn Chinese enterprises into world-class,
globally competitive firms,” Xi said. “In the state-owned
sector, we will step up improved distribution, structural
adjustment, and strategic reorganization,” he said.
Vowing to take effective measures to prevent the loss of
state assets, the CPC will also work to ensure state assets
“maintain and increase” their value, and support state
capital in “becoming stronger, doing better, and growing
bigger,” Xi said.
HSBC Economist Julia Wang described the long-term
nature of the plan as “remarkable and unprecedented.”
However, making President Xi’s vision become a reality
will demand a freer market and more open economy.
At the Congress, Xi spoke of letting the market play the
decisive role in resource allocation, pursuing opening
up on all fronts and significantly easing market access.
The Party has a good record in keeping its word. While
its economic policies remain far from perfect, reform
has deepened at a swift and steady pace over the past
five years. State Council departments have canceled or
102
the average debt-to-asset ratio of central SOEs dropped delegated the power of more than 600 administrative
to 66.5 percent, 0.2 percentage points lower than the approvals to lower-level offices, meeting government
level at the beginning of 2017. “The debt risk level at targets ahead of schedule. China has every reason to
central SOEs is reasonable and controllable,” said Huang deepen reform and open wider to the outside. The
Danhua, Vice Chairwoman of SASAC. “Apart from asset country’s development has come to, in the words of Xi, “a
restructuring, central SOEs can also direct their resources new historic juncture.” China now “embraces the brilliant
toward competitive companies or industries through prospects of rejuvenation,”and to achieve that, one of the
equity cooperation, asset swaps, strategic alliances and key tasks is to deepen reform and “get rid of all outdated
joint ventures,” she said. Under the government plan, thinking and ideas and all institutional ailments.” Xi
debt-to-equity swaps will be pushed forward, with announced the Party would “sort through and do
state investment funds encouraged to participate in the away with regulations and practices that impede the
process. Central SOEs will speed up the pace of mergers development of a unified market and fair competition.”
and acquisitions, or M&A’s. To cut the leverage ratio, Xi declared “socialism with Chinese characteristics has
SASAC has also encouraged SOE behemoths to optimize crossed the threshold into a new era” (Wang, Visionary).
capital structure via initial public offerings, and supported
efforts toward asset securitization. Huang said central
SOEs have made headway in cutting outdated capacity,
reining in debt risks and improving competitiveness. So
far, almost 69 percent of central SOEs at all levels have
been involved in the mixed-ownership reform, while 47
percent of local SOEs were also involved, according to
SASAC data (Yu).
In a remarks in a report to the 19th National Congress,
Xi Jinping called for furthering reform of SOEs and
making them “stronger, better and bigger.” He urged
more efforts to improve the systems for managing
different types of state assets, and reform the system of
authorized operation of state capital. “We will further
reform of SOEs, develop mixed-ownership economic
entities, and turn Chinese enterprises into world-class,
globally competitive firms,” Xi said. “In the state-owned
sector, we will step up improved distribution, structural
adjustment, and strategic reorganization,” he said.
Vowing to take effective measures to prevent the loss of
state assets, the CPC will also work to ensure state assets
“maintain and increase” their value, and support state
capital in “becoming stronger, doing better, and growing
bigger,” Xi said.
HSBC Economist Julia Wang described the long-term
nature of the plan as “remarkable and unprecedented.”
However, making President Xi’s vision become a reality
will demand a freer market and more open economy.
At the Congress, Xi spoke of letting the market play the
decisive role in resource allocation, pursuing opening
up on all fronts and significantly easing market access.
The Party has a good record in keeping its word. While
its economic policies remain far from perfect, reform
has deepened at a swift and steady pace over the past
five years. State Council departments have canceled or
102
