Song Donglin on deepening the reform of state-owned enterprises: We must create an atmosphere of courage to explore and also be able to tolerate failure
2024-08-17
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“The biggest challenge in deepening the reform of state-owned assets and state-owned enterprises is probably innovation.”
On August 15, Song Donglin, director of the China State-owned Economy Research Center of Jilin University and former president of Jilin University of Finance and Economics, said this in an exclusive interview with The Paper (www.thepaper.cn) at the "Modern New State-owned Enterprise Seminar".
In his view, innovation includes two aspects: on the one hand, state-owned enterprises should continue to focus on original innovation and achieve a breakthrough from "0 to 1"; on the other hand, they need to strengthen institutional innovation. In this process, they need to create an atmosphere that encourages innovation and courage to explore, and establish a cultural environment that tolerates failure. Song Donglin believes that only when state-owned enterprises dare to try and make mistakes and dare to tolerate mistakes can they fully innovate. "If everyone lies down and is unwilling to make mistakes, innovation in state-owned enterprises will never be realized."
In Song Donglin's opinion, the goal of state-owned assets and state-owned enterprise reform is to enable state-owned enterprises to enhance their core functions and improve their core competitiveness.
He also mentioned that state-owned enterprises should actively play the role of "patient capital" and lead private enterprises and social capital to jointly transcend the limitations of short-term interests and actively engage in medium- and long-term industrial layout, especially in those resource-rich but relatively backward economic regions. They should play a leading role, attract and gather more companies to settle in, jointly promote the economic development of these regions, and achieve regional economic coordination and development.
The "Modern New State-owned Enterprises" seminar was guided by the News Center of the State-owned Assets Supervision and Administration Commission of the State Council, hosted by "State-owned Assets Report" magazine and The Paper, and co-organized by the Shanghai State-owned Assets Supervision and Administration Commission. It was held on August 15 on the Bund in Shanghai.
Focus: Enhance core functions and improve core competitiveness
In order to further improve the quality and efficiency of state-owned assets and state-owned enterprise reforms, in June 2023, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the "Action Plan for Deepening and Improving State-owned Enterprise Reform (2023-2025)" (hereinafter referred to as the "New Three-Year Plan"), marking the official launch of a new round of deepening state-owned enterprise reforms.
In June this year, Song Donglin mentioned in his article "Giving Full Play to the Important Role of State-owned Enterprises in Developing New Quality Productive Forces" that the "New Three-Year Plan" will adjust the focus of deepening the reform of state-owned enterprises toward "enhancing core competitiveness, enhancing core functions" and "building modern new state-owned enterprises."
Recently, the Third Plenary Session of the 20th CPC Central Committee reviewed and passed the "Decision of the CPC Central Committee on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization" (hereinafter referred to as the "Decision"), which made arrangements for deepening the reform of state-owned assets and state-owned enterprises.
The "Decision" mentions that we should deepen the reform of state-owned assets and state-owned enterprises, improve the management and supervision system and mechanism, enhance the strategic coordination of relevant management departments, promote the optimization of the layout and structural adjustment of the state-owned economy, promote the strengthening, optimization and expansion of state-owned capital and state-owned enterprises, enhance core functions and improve core competitiveness.
Song Donglin pointed out that the Third Plenary Session of the 20th CPC Central Committee put forward clear goals and action requirements for deepening the reform of state-owned assets and state-owned enterprises, which not only provide directional guidance but also practical requirements, and provide the next action program for all work of state-owned assets and state-owned enterprises.
In Song Donglin's opinion, the focus of deepening the reform of state-owned assets and state-owned enterprises is to enable state-owned enterprises to enhance their core functions and improve their core competitiveness, and the key lies in how to organically combine core functions with core competitiveness.
Song Donglin believes that the positioning of state-owned enterprises determines the definition of their core functions. As an important pillar of the national economy, state-owned enterprises not only carry the mission of benchmarking against world-class enterprises and enhancing international competitiveness, but also shoulder the important task of serving the country's major strategic needs. It is based on such positioning and mission that strengthening the core functions of state-owned enterprises has become an important task.
Closely related to this is that the "Decision" clearly points out that the key investment areas and directions of state-owned capital are moving towards "three concentrations": promoting the concentration of state-owned capital in important industries and key areas related to national security and the lifeline of the national economy, in public services, emergency response capabilities, and public welfare areas that are related to the national economy and people's livelihood, and in forward-looking strategic emerging industries.
In the strategic deployment of deepening the reform of state-owned assets and state-owned enterprises in the "Decision", "enhancing core competitiveness" was mentioned right after "enhancing core functions".
In Song Donglin's view, the key to improving the core competitiveness of state-owned enterprises lies in actively cultivating and developing new quality productivity. He pointed out that although many industries in my country have achieved the same level as or even lead the world's advanced level, in the field of emerging strategic industries, my country is still in a complex and changing external environment and faces many challenges.
In this context, state-owned enterprises, as a solid pillar for promoting the growth of new quality productivity, need to focus on "original innovation", that is, innovation "from 0 to 1".
Innovation is the biggest challenge
"The biggest challenge in deepening the reform of state-owned assets and state-owned enterprises is probably innovation, because innovation involves doing things that have never been done before," said Song Donglin.
It is worth noting that the "Decision" mentioned the need to "improve the institutional arrangements for state-owned enterprises to promote original innovation."
Song Donglin pointed out that innovation covers two core dimensions: one is mechanism innovation, and the other is technological innovation. He mentioned that if we explore the core tasks of cultivating and developing new quality productivity, it is actually closely centered around these two major innovation areas.
Song Donglin specifically pointed out that given the core impact of technological innovation on the competitiveness of state-owned enterprises, enterprises naturally pay great attention to it in their daily operations, but some enterprises may ignore the importance of mechanism innovation.
Technological innovation and mechanism innovation are like the two wheels of a car, complementing each other and indispensable. Song Donglin hopes that innovation can become the endogenous driving force for the development of enterprises, rather than a passive reaction to external competitive pressure.
Song Donglin stressed that in the process of promoting institutional innovation, it is necessary to create an atmosphere that encourages innovation and exploration, and also to establish a cultural environment that tolerates failure. Only when state-owned enterprises dare to try and make mistakes and dare to tolerate mistakes can they fully innovate. "If everyone lies down and is unwilling to make mistakes, innovation in state-owned enterprises will never be realized."
"Reforms are often easy at first but become difficult later," Song Donglin said, adding that the reform of state-owned assets and state-owned enterprises has been advancing in depth. The deepening not only indicates that the reform has entered the deep water zone, but also means that every key task carries huge challenges.
He pointed out that with the in-depth implementation of the "Belt and Road" initiative, the pace of overseas expansion of state-owned enterprises has accelerated, but the resulting regulatory challenges cannot be ignored and will become a top priority of reform work.
In addition, the Decision also mentioned "improving the classification assessment and evaluation system for state-owned enterprises". Song Donglin said that the traditional model based on subjective assessment is changing to a more objective and quantitative direction. How to learn from international advanced objective indicators and combine them with China's national conditions to build a scientific and practical evaluation system is a topic that needs to be explored in depth. In particular, the application of financial indicators such as the added value of the state-owned economy, although there is mature experience internationally, how to ensure that it is "suitable" in Chinese enterprises and avoid mechanical application is also a challenge that needs to be faced.
State-owned enterprises should actively play the role of "patient capital"
The "Decision" also mentioned that "promoting the optimization of the layout and structural adjustment of the state-owned economy."
In this regard, Song Donglin said that state-owned enterprises are not only participants in the market economy, but also promoters and leaders of high-quality development of the regional economy.
Generally speaking, in the development of local industries, leading state-owned enterprises often play a key role as "chain leaders". Through their strong leadership, they effectively attract small and medium-sized enterprises to take root locally, thereby driving the development of the entire industrial chain and even industrial clusters, and thus helping the high-quality development of the local economy.
Song Donglin pointed out that some underdeveloped regions are often unable to seize opportunities for development due to their insensitivity to market regulation signals. State-owned enterprises should play the role of "patient capital" and lead private enterprises and social capital to jointly transcend the limitations of short-term interests and actively engage in medium- and long-term industrial layout, especially in resource-rich but relatively backward regions, play a leading role, attract and gather more enterprises to jointly promote the economic development of these regions and achieve regional economic coordination and development.
At the same time, regarding the "layout optimization and structural adjustment of the state-owned economy", Song Donglin specifically mentioned the coordinated development of state-owned enterprises and private enterprises. According to a previous report by The Paper, since the deepening and upgrading of state-owned enterprise reform, central enterprises have actively carried out equity cooperation with private enterprises and other social capital, with an amount exceeding 390 billion yuan; currently, among the more than 2 million enterprises in the upstream and downstream of the supply chain directly driven by central enterprises, 96% are private small and medium-sized enterprises.
Wang Hongzhi, deputy director of the State-owned Assets Supervision and Administration Commission of the State Council, recently publicly stated that state-owned enterprises, especially central enterprises and local state-owned enterprises, and state-owned enterprises in various regions, should give full play to their own resource endowments and technological advantages, widely explore cooperation scenarios, increase exchanges and cooperation, and promote complementary advantages, resource integration, staggered development, mutual benefit and win-win results among all parties. Leading enterprises should actively plan and promote restructuring and integration along the industrial chain, and promote more reasonable allocation of resources in the industrial chain and innovation chain on a larger scale and at different levels.
In the grand layout of regional coordinated development, Song Donglin believes that developed regions should serve as the "locomotive", focus on the global perspective, plan future industries in a forward-looking manner, and build a solid platform for the development of state-owned enterprises.
The Yangtze River Delta is one of the regions with the most active economic development, the highest degree of openness and the strongest innovation capabilities in my country. As the core city of the world-class Yangtze River Delta city cluster, Shanghai plays an important role in the coordinated development of the region. "I hope Shanghai can provide a 'Shanghai model' that improves the original innovation system arrangement." Song Donglin said.
Thepaper.cn reporter Dina
(This article is from The Paper. For more original information, please download the "The Paper" APP)
