Chinese state firms to work with private capital to boost competitiveness

SHANGHAI/BEIJING (Reuters) - China vowed on Monday to boost the competitiveness of state companies through reforms including more cooperation with private firms and capital - while keeping a firm grip on strategic industries such as network infrastructure.

As part of a three-year programme, China will encourage more listings by state-owned enterprises (SOEs) and will also prod listed SOEs to introduce private strategic investors to help improve corporate governance and accelerate mixed-ownership reforms, China’s state asset regulator said.

“We should deepen cooperation with private firms as well as small- and medium-sized enterprises, so that we mingle with each other, and develop together,” Wen Jieming, vice chairman of State-owned Assets Supervision and Administration Commission (SASAC) told a news conference in Beijing.

He said the Chinese Communist Party would ensure control over SOEs that introduced private capital.

Beijing is accelerating mixed-ownership reforms at a time when many small, private firms suffer more than SOEs in a slowing economy due to relative weak backing from China’s state-dominated banking system.

It also comes as an increasing number of SOEs, including China Communications Construction Company 601800.SS1800.HK and Hangzhou Hikvision Digital Technology Co 002415.SZ are under sanctions from Washington over national security concerns or alleged human rights violations.

SASAC spokesman Peng Huagang told the same news conference that state capital should concentrate on industries involving national security, such as military, energy, grain and strategic network infrastructures.

Meanwhile, SOEs will invest more in emerging sectors including 5th generation wireless systems (5G), artificial intelligence and data centres, part of efforts to foster globally competitive companies.

Reporting by Samuel Shen and Andrew Galbraith; Editing by Alison Williams