Beijing offered further hope to international investors on Tuesday after President Xi Jinping’s push for globalisation, inviting foreign companies to take part in the reform of the mainland’s major state-owned enterprises (SOEs).
Xiao Yaqing, head of the State-owned Assets Supervision and Administration Commission (Sasac), said foreign businesses were welcome to buy stakes in China’s industrial juggernauts as part of efforts to enhance SOEs’ competitiveness through ownership restructuring.
“Domestic and foreign companies are cordially invited to engage in the SOE reform via equity financing deals,” Xiao told a forum at the China International Import Expo in Shanghai on Tuesday. “They will play a role in deepening the reform, upgrading the SOEs’ manufacturing might, and hence reaping their gains from the growth of the companies.”
Xi Jinping makes fresh promises to open China’s economy and boost imports
Xiao’s remarks came after President Xi called for further globalisation during the opening of the Expo on Monday and pledged that China’s economy would continue to open up.
The president also attacked unilateralism, in a thinly veiled criticism of the United States as the trade war between the world’s two largest economies continues.
Beijing has maintained a tight grip on the major state-owned manufacturing companies because most of them are in industries considered the backbone of the economy, such as telecoms, coal mining and oil processing.
They are widely perceived as having enjoyed a cosy market monopoly while raking in easy profits.
But since 2014, Beijing has been actively promoting mixed-ownership – a move to introduce privately owned or overseas companies as stakeholders – to enhance their corporate governance.
The Sasac has selected dozens of companies under its oversight to sell down state-held shares.
“Globalisation is an irreversible trend,” Xiao said, adding that China’s SOEs would be encouraged to integrate themselves into the world economy and become part of the global supply chain.
Until recently, part-ownership of an SOE has been virtually inconceivable for foreign investors.
“But President Xi’s promise to open the Chinese market and economy to the world is set to have some substance for SOE reform,” said Ding Haifeng, a consultant with Shanghai-based Integrity Financial Consulting. “To introduce global leaders to be stakeholders of the major Chinese manufacturers will also effectively reinforce efforts to achieve the goals under the Made in China 2025 initiatives.”
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The “Made in China 2025” industrial strategy is an ambitious plan to have the country catch up with global leaders and become self-sufficient in 10 core technologies, including aviation, robotics and new-energy vehicles.
Analysts said more opportunities would arise in the automotive sector for foreign vehicle builders to form partnerships with major SOEs such as FAW Group, the country’s oldest carmaker.
Last August, China Unicom raised US$11.7 billion from a dozen private domestic investors including Baidu, JD.com and China Life Insurance in a deal that was widely interpreted as the official start of the mixed-ownership reforms.