China Focus: Profits gain as local SOEs deepen reform

Source: Xinhua| 2018-03-08 23:32:33|Editor: Mu Xuequan
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TAIYUAN/SHENZHEN, March 8 (Xinhua) -- Li Qiuxi remains chairperson of a provincial state-owned enterprise (SOE), thanks to the fulfillment of the annual revenue and profit growth targets set in a letter of responsibility last year.

Under the contract Li signed with the Shanxi state-owned assets watchdog in February 2017, one target for Fenjiu Group, the first pilot SOE in the contractual management reform in the province, was to increase its annual profit of the liquor sector by 25 percent. Otherwise, Li would be dismissed from his post with the company.

Far above the target, the profit of the liquor sector of Fenjiu Group, one of the country's leading liquor brands, increased by 68 percent year-on-year last year. Other major performance targets in the contract were also achieved.

The pilot reform has been extended to 17 SOEs in coal-rich Shanxi, including Taiyuan Iron and Steel (Group) Co., Ltd and Shanxi Coking Coal Group.

Contractual management is a major SOE reform in Shanxi, prompting SOEs to speed up structural adjustment for high-quality development through clear and scientific performance assessment, said Wang Yixin, vice governor of Shanxi.

Reforms will be advanced in state capital and SOEs, according to the government work report delivered by Premier Li Keqiang to the first session of the 13th National People's Congress(NPC), China's top legislature, on March 5.

"Our SOEs should, through reform and innovation, become front-runners in pursuing high-quality development," said the report. Reforms introducing mixed ownership in SOEs will be carried forward prudently.

Chinese SOEs saw 23.5 percent profit growth last year thanks to continued reform to boost efficiency and vitality, official data showed.

SOE reform, aimed at improving efficiency and competitiveness through innovation, remains a priority for local governments this year. The southern coastal city of Shenzhen, Guangdong Province, has targeted growth of 9 percent or more in the total profit of municipal SOEs this year.

The city will comprehensively push ahead mixed ownership reform this year and develop first-class enterprises with global influence, according to Peng Haibin, director of the Shenzhen State-owned Assets Supervision and Administration Commission.

In northeast China, progress in SOE reform has bolstered the economy in the old industrial base which has experienced difficulties in recent years.

In Liaoning Province, Liaoyang Petrochemical Company reported profit for the first time in 13 years in 2017 and Ansteel Group also turned losses into profit last year.

After dealing with zombie businesses, Ansteel ended losses for the past five consecutive years and achieved profit of 1.5 billion yuan (237 million U.S. dollars) in 2017.

"The cutting of low-efficiency production capacity has provided room for Ansteel's shift from survival to development," said Yao Lin, general manager of Ansteel.

It is important to build a diversified shareholding structure, accelerate innovation, and foster high-end talent for better development of firms, said Dai Jishuang, chairperson of state-owned Shenyang Blower Works Group in Liaoning.