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China to overhaul state-owned enterprises, says report

China's State Council has approved plans to reform state-owned enterprises (SOEs), according to the South China Morning Post11 Aug 2015

Investment companies will be set up to channel funds to the SOEs, and to encourage them to make a profit, the South China Morning Post said. The new companies are described in the report as 'Temasek-style', named after an investment company owned by the Singaporean government, which operates as a sovereign wealth fund.

The SOEs will be able to make more of their own business decisions, and their boards will be able to make decisions on hiring, and firing, managers, the South China Morning Post said.

SOEs will continue to be overseen by the State Council's State-owned Assets Supervision and Administration Commission (Sasac), but Sasac will no longer intervene in the day to day running of the enterprises, the newspaper said.

Li Jin, a Sasac expert studying SOE reform, told the South China Morning Post that the restructure would cut government intervention and give SOEs more scope to chart their own commercial course. "It’s an efficient way to separate political and business goals," he said.  

It is likely that SOEs will be grouped into industries, each with its own rules for privatisation, Li told the newspaper. "Once the overall blueprint is released, guidance on changes in specific areas will come out," he said.

The plan will change the current distribution of power, so there will inevitable be disputes between all parties involves before final changes are agreed, Li told the newspaper.

Shares in the SOEs 'surged' on the news, Bloomberg said.

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