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China picks SOEs for pilot reforms

China will pick three to five state-owned enterprises (SOEs) for a pilot reform programme that aims to improve the management of government assets, China Daily has reported.29 Feb 2016

Two companies, China Chengtong Holdings and China Reform Holdings have already been chosen for the programme and are being reorganised into state-owned asset-operating firms, Zhang Xiwu, deputy head of the state-owned assets supervision and administration commission (SASAC) of the State Council told China Daily.

The priority for this year will be to set up or restructure companies that invest and operate state-owned assets, to strengthen overall management, Zhang told China Daily.

The reforms aim to "explore new state-owned asset management models focused on the management of the capital rather than the companies, find effective means for a mixed-ownership economy and improve corporate governance structure", Zhang said.

China Chengtong and China Reform declined to comment, the news site said.

China Chengtong, based in Beijing, was founded in 1992 and is supervised by Central Work Committee for Large Enterprises. It is involved in asset management, logistics services, forestry, and pulp and paper products. The group owns more than 100 subsidiaries, and has businesses in tourism and cultural and packaging industries.

China Reform, a capital-operating company backed by SASAC, was founded in 2010 to fuel the integration of state-owned enterprises, according to China Daily.

China published guidelines on SOE reform in November.

Under the new guidance, China's state capital will no longer be invested in some SOEs, while others will be restructured or upgraded, state-owned news agency Xinhua reported. The released capital will be invested in major infrastructure, "forward looking and strategic" industries, in the industrial supply chain, and in "firms with strong competitiveness", it said. 

In September the Chinese government released guidelines on SOE ownership and salaries. SOEs would be divided into two categories, for-profit entities and those dedicated to public welfare, it said at the time.

Earlier in 2015 the South China Morning Post reported that the SOE reforms were expected to create 'Temasek-style' businesses, named after an investment company owned by the Singaporean government, which operates as a sovereign wealth fund.

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