China SOEs to resist privatization, consolidate Party rule: state asset regulator

The director of China's state assets regulator Xiao Yaqing speaks to the media after his news conference during the ongoing National People's Congress (NPC), China's parliament, in Beijing, China March 9, 2017. REUTERS/Jason Lee

SHANGHAI (Reuters) - China must resist “erroneous” ideas such as privatization and strengthen the role of the Communist Party in publicly owned firms, the head of the country’s state asset regulator said in remarks published on Friday.

China is in the middle of a reform program aimed at shaking up its bloated, debt-ridden state sector with the aim of creating “innovative and globally competitive multinationals”.

But China’s leaders have repeatedly stressed that while firms need be more competitive and respond better to the market, they must also continue to fulfill their “strategic” functions under the strengthened leadership of the Chinese Communist Party.

Xiao Yaqing, chairman of the State-Owned Asset Supervision and Administration Commission (SASAC), said China should not waver in its efforts to make state-owned firms “strong and big”.

But China must “resolutely resist erroneous thinking such as ‘privatization’, ‘denationalization’ and ‘removing the leading role’ (of SOEs),” Xiao wrote in Study Times, the Communist Party’s theoretical journal.

“To develop and strengthen the state-owned economy, (China)must strengthen the substantive and political foundations of Party rule,” he said.

The government is currently driving through a series of ownership reforms designed to inject private capital into government enterprises. It is also urging firms in a variety of industrial sectors to merge, to end “duplication” and irrational competition.

Xiao said the government currently manages company assets worth 144.1 trillion yuan ($21.14 trillion), and SOEs contribute a fifth of total tax receipts and account for more than 40 million jobs, as well as more than 10 million Communist Party members.

Reporting by David Stanway; Editing by Christopher Cushing