CHINA-NPC: ECONOMY - NPC SETS BROAD GUIDELINES FOR SOEs

Complying with Xi Jinping's instructions that SOEs should be "bigger, better, and stronger", the 14th Five-Year Plan has encouraged SOEs to focus on their core business. It listed six metrics by which SOEs will be evaluated: (i) Improving net profits; (ii) Keeping the growth rate of total profits higher than that of the national economy; (iii) Improving operating income and profit margins; (iv) Increasing R&D investment; (v) Improving total labor productivity; and (vi) Keeping the asset-liability ratio stable. The 14th FYP also said “We should strengthen the goal of capital gains and financial hard targets”, or in other words, tough targets should be set for SOEs. As part of the effort to increase profitability, it has considered more private players to be allowed in some sectors traditionally dominated by SOEs viz. Energy; Railways; Telecommunications; and Public Utilities. At the same time the 14th FYP stressed “[We should] promote the state-owned economy to further focus on strategic security, industry leadership, the national economy and people’s livelihood, public services, etc.”







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