Deepen the reform of state-owned assets and state-owned enterprises and promote a new chapter of "people's progress together"
2024-08-21
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The Third Plenary Session of the 20th CPC Central Committee pointed out that it is necessary to "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", and further established the principle of classified reform of state-owned assets and state-owned enterprises.The first category of reform is to promote the optimization of the layout of the state-owned economy.The state-owned economy is divided into public welfare and commercial sectors, among which the commercial sector is further divided into Category I and Category II. In principle, public welfare enterprises are operated by the government, Category II commercial enterprises are mainly in natural monopoly industries, and state-owned capital should occupy a controlling position, while Category I commercial enterprises are in the competitive field and should undergo market-oriented reforms. According to this classification, different types of state-owned enterprises have their own functional positioning, and their main businesses and responsibilities must be clearly defined.
The Third Plenary Session of the 20th CPC Central Committee has identified key investment areas for state-owned capital: important industries and key areas related to national security and the lifeline of the national economy; public services, emergency response capabilities, and public welfare areas related to the national economy and people's livelihood; and forward-looking strategic emerging industries. Most of these key areas are non-competitive areas. In these important areas, we should promote the strengthening, optimization, and expansion of state-owned capital and state-owned enterprises. In competitive areas, we should comprehensively promote market-oriented reforms, adhere to fair competition and transparent management, especially cancel fiscal subsidies, so that state-owned and private enterprises can compete fairly in these areas.
According to my understanding, the main business is where state-owned capital has something to do and advance, that is, the three key areas mentioned above; the competitive areas outside these three areas are where it should not do something and retreat. By promoting the optimization of the layout of the state-owned economy through the principle of classified reform, state-owned capital and private capital can play their advantages in their respective areas of expertise, achieve complementary advantages, and develop together. By promoting the optimization of the layout of the state-owned economy, the state-owned capital, state-owned enterprises and private economy are not a simple opposition of "state advances and private retreats" or "state retreats and private advances", but can achieve "national advance together", that is, the common development of the state-owned economy and the private economy.
The second classification reform involves the industry itself.We generally divide industries into competitive and non-competitive sectors, and in the non-competitive sector, they are further divided into public product sectors and natural monopoly industries. It is generally believed that natural monopoly industries usually have market failures, and at the same time, they need to achieve specific national goals, and state-owned capital needs to maintain a controlling position in such industries. According to the decision of the Third Plenary Session of the 18th CPC Central Committee, natural monopoly industries are key investment sectors of the state, and state-owned capital should occupy a dominant position, but natural monopoly industries can be divided into two parts: monopoly links and competitive links. According to the principle of classified reform, the monopoly links in natural monopoly industries should be operated independently, and state-owned capital should maintain a dominant position, which is the core part of the main business. In the industrial chain of monopoly industries, the downstream should be a competitive link, which needs to be market-oriented reformed, and private capital should be allowed to enter the competitive links of monopoly industries. Reform practice has proved that accelerating the market-oriented reform of the competitive links of monopoly industries can greatly improve operating efficiency and supply efficiency. For example, the power industry can be divided into three parts: power grid, distribution and power generation. Among them, the power grid belongs to the monopoly link, and state-owned capital operates independently. The distribution side has both monopoly links and competitive links. In the past, the market-oriented reform on the distribution side has been promoted. The power generation side belongs to the competitive link, and the market-oriented reform has achieved remarkable results. The meeting further proposed to promote the independent operation of natural monopoly links and market-oriented reform of competitive links in industries such as energy, railways, telecommunications, water conservancy and public utilities. Such reforms will not only improve the operating efficiency of natural monopoly industries, but also provide better space for the development of private capital.
The third classification reform is to improve the classification assessment and evaluation system of state-owned enterprises.The Third Plenary Session of the 20th CPC Central Committee pointed out that "it is necessary to establish an evaluation system for state-owned enterprises to fulfill their strategic missions, improve the classification assessment and evaluation system for state-owned enterprises, and carry out the accounting of the added value of the state-owned economy". Since state-owned enterprises are of different types and have different functions, the same standard cannot be used to assess all enterprises. State-owned enterprises have multiple functions and multiple goals, including the political foundation for the Communist Party's governance, the main body of socialist public ownership, making up for market failures, providing basic conditions for economic development, reflecting the will of the state in international competition, and pursuing market efficiency to maximize profits. Although the above goals are all important, in fact, it is difficult for a single enterprise to achieve and undertake all of the above functions at the same time. Different types of enterprises need to cooperate with each other to achieve the above many goals. If different assessment standards are applied to different types of state-owned enterprises, relevant functions can be undertaken in different enterprises, thereby achieving the above multiple goals as a whole.
There are many types of state-owned enterprises, such as wholly state-owned enterprises, state-controlled enterprises and state-owned equity enterprises. These enterprises cannot be evaluated according to the same assessment standards, but should be evaluated according to different industries, equity structures and functions. Due to different equity structures, the governance framework and governance logic of these enterprises are also different, and the assessment indicators should also be different.
Even for wholly state-owned companies, the companies under their groups are of different types. For example, PetroChina and Sinopec are wholly state-owned at the group level, and the group controls many subsidiaries, grandchildren and even great-grandchildren. These subsidiaries and grandchildren not only have different equity structures, some are wholly state-owned subsidiaries, but many are subsidiaries with diversified property rights. At the same time, some of these subsidiaries are distributed in the main business and belong to the monopoly link, but many are distributed in the auxiliary business and belong to the competitive link of the monopoly industry, or directly enter the competitive field and compete directly with private enterprises. Therefore, for such central enterprises, the assessment indicators between the group headquarters and subsidiaries and grandchildren should be different. For example, for the main business subsidiaries controlled by the parent company PetroChina, state-owned capital should occupy a major position in the mixed ownership reform, and the assessment should refer to the assessment indicators of the group company; if the subsidiaries controlled are subsidiaries in the competitive link, private capital should participate more in the mixed reform; if the subsidiaries controlled are purely competitive fields, then state-owned capital can hold a controlling stake, participate in shares or even withdraw, and the assessment indicators should reflect more market requirements.
In general, the Third Plenary Session of the 18th CPC Central Committee further clarified the three directions of classified reform: first, to promote the optimization of the layout of the state-owned economy based on the principle of classified reform; second, classified reform within the industry; and third, to improve the classified assessment and evaluation system for state-owned enterprises.This principle of classified reform can further deepen the reform of state-owned assets and state-owned enterprises, and provide a solid institutional foundation for the complementary advantages and common development of the state-owned economy and the private economy. It not only implements the principle of "two unshakable" but also solves the difficulties in the current development of the private economy, while upholding the dominant position of public ownership.
(The author is a national first-level professor and co-director of the Institute of Economics at Renmin University of China)
