SIX of China’s biggest State-owned firms have drawn up plans to reduce debt and leverage in the coming two years, domestic media said Friday, part of the country’s efforts to rejuvenate the debt-ridden sector.

China began a new round of reforms in 2016 aimed at streamlining its State-owned enterprises (SOEs) by introducing private capital, curbing overcapacity, shutting down “zombie” subsidiaries and restructuring assets.

It has already cut the total number of companies under Central Government control to 96, down from 117 in 2012.

The China Securities Journal said Friday that the six firms — including the country’s biggest refiner, the Sinopec group — have already finished drawing up their debt-reduction plans and have submitted them to the regulator, the State Asset Supervision and Administration Commission (SASAC).

Two of China’s big State power groups, Huaneng and Huadian, as well as the China Railway Construction Corp., the China State Construction Engineering Corp. and the China Merchants Group, are also among the six pilot enterprises, it said, adding that the SASAC itself was also preparing to release its “work plan” to control debt ratios at the 96 firms now under its jurisdiction.

The 96 companies are under pressure to cut debt to asset ratios by an average of 2 percentage points by 2020.

SASAC chairman Xiao Yaqing told a meeting of executives earlier this month that firms needed to adjust investment structures, slash excess capacity and improve cash flow management in order to achieve the goal.

Debt to asset ratios among Central Government enterprises stood at an average of 66 percent by the end of June, down 0.3 percentage points since the beginning of the year, the SASAC said. The figure still amounts to about 36 trillion yuan (US$5.4 trillion).(SD-Agencies)