CHINA will work to reform its huge State-owned enterprises (SOEs), making them more subject to market forces and restructuring those that are performing poorly while allowing some to close, government officials said yesterday.

    In a long-awaited reform document published Sunday, the government said it would introduce “mixed ownership” into its sprawling State sector, heralding its most far-reaching overhaul of the bloated State sector in two decades, a task that has become more pressing as the economy slows.

    Zhang Xiwu, deputy head of the country’s State assets supervisor, told a news briefing that China would work to reorganize and merge SOEs in order to centralize State-owned capital in key industries, while restricting State investment in industries not in line with national policies.

    “We will make more efforts in reforming ‘zombie enterprises,’ long-time loss-making enterprises and in disposing of those low-efficient and non-performing assets,” said Zhang of the State-owned Assets Supervision and Administration Commission (SASAC).

    Zhang said that China would use stock exchanges, property exchanges and other capital markets to sell the assets of low performing SOEs “at fair prices.”

    Under a pilot scheme, oversight for 111 SOEs will be transferred this year from regulatory bodies to State capital investment and operating firms, Xu Hongcai, Assistant Minister of Finance, said.

    Representatives from five government agencies, including the trade and labor ministries as well as the top economic planner, spoke at yesterday’s briefing, and presented their own documents on the reform plan, leading some analysts to question how effective the liberalization would be.

    SASAC’s Zhang vowed to raise the performance of China’s lumbering State sector by making them “stronger, better and larger” but conceded there would be difficulties pushing through the reforms.

    Speaking to Reuters on the numbers of SOEs that would be cut, Lian Weiliang, vice chairman of the country’s National Development and Reform Commission, said there was no such plan.

    China’s State sector is dominated by 111 Central Government-owned conglomerates, which account for about 60 percent of SOE revenue and are overseen by SASAC. Domestic media reported earlier this year that the number could shrink to 40 through mergers.(SD-Agencies)