Chinese state-owned enterprises defend further growth

BEIJING Fri Nov 9, 2012 6:34am GMT

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BEIJING (Reuters) - Bosses of Chinese state-owned enterprises argued for continued expansion on Friday, defending themselves against charges that their firms are in urgent need of reform with claims they are vital to national economic security while still struggling with the legacy of the planned economy.

Chinese reformers and Western governments have taken aim at the state sector in recent years, claiming it gets the lion's share of preferential loans and policies. The calls for reform had built up as factions manoeuvred ahead of a once-in-a-decade leadership transition.

The critics claim that without further reform of the state sector, China's growth will stagnate. They call for equal opportunity for private firms, which provide most of the new jobs in China.

In his address to a Communist Party Congress on Thursday, outgoing Chinese President Hu Jintao called for more investment in the state sector while also improving its regulation and diversifying the forms of public ownership.

"The direction of the SOE (state-owned enterprise) reform should be: SOEs must be more market-oriented and they must keep strengthening their vitality and influence," Wang Yong, director and communist party secretary of the State-owned Assets Supervision and Administration Commission, told reporters on Friday.

"Scholars may have different views, but that's the development need of the enterprises and the state."

Indeed, state bosses emphasized their importance to what they called "national economic security" in their gathering on Friday, laying out plans for further investment and overseas expansion.

That came after Hu's remarks hinted at a further strengthening of the state in strategic sectors, with the possibility of more market-oriented competition in other sectors.

"We should unwaveringly consolidate and develop the public sector of the economy, allow public ownership to take diverse forms, deepen the reform of state-owned enterprises, improve the mechanisms for managing all types of state assets and invest more state capital in major industries in key fields that comprise the lifeline of the economy and are vital to national security," Hu Jintao told assembled party members on Thursday.

(Editing by Nick Macfie)

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