China reforms state-owned firms to be more nimble – 27 Jul 2017

  • All big companies owned by the central government will be registered as limited liability companies or joint-stock firms by the end of 2017 as China moves to make its state-owned giants more nimble, efficient and modern.
  • About 90% of China’s state-owned firms have already completed the process, which has improved their governance structures and management, the Cabinet said in a statement on 26 Jul 17.
  • The central government hopes to revive the bloated and debt-ridden state-owned sector and create “bigger and stronger” conglomerates capable of competing on the global stage. The reforms will include shutting the most uncompetitive firms.
  • One of the biggest problems China faces, is a spike in debt since the 2008 global financial crisis. The authorities have stepped up efforts to contain debt risks
  • People’s Bank of China governor Zhou Xiaochuan said banks will withdraw support for financially unviable firms, repeating pledges by officials to drive “zombie” firms out of the market.
  • China is also pushing mixed ownership to allow private capital to invest in firms while retaining state presence in the companies.

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