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Special> Video> Latest
UPDATED: November 10, 2013
Third Plenum to Examine Reforming State-Owned Sector

Calls to reform China's State Owned Enterprises (SOEs) have grown steadily louder as the key meeting of the Central Committee of the Communist Party of China (CPC) began on November 9. Some of the reform suggestions include introducing market competition and increasing efficiency within these giant companies.

A possible restructuring of China's oil giant CNPC, has placed it at the forefront of talks of reform.

With 1.5 million employees, CNPC, the parent firm of Petro China, is Asia's largest integrated energy company. It has a monopoly over 55 percent of China's crude oil resources and 65 percent of its natural gas.

Experts suggest breaking up the company into different parts to increase its efficiency.

"Since PetroChina controls the majority of pipelines in the country, the first step is to open up these lines to other enterprises. Secondly, the group should set up different corporations to manage its different businesses -- oil exploitation, oil services, pipelines and natural gas -- and it should diversify its shareholders," said Han Xiaoping, oil industry expert.

China's SOEs have for years been in charge of key industries and have given China the building blocks for its rapid development. But several SOEs, including China Ocean Shipping Company and China International Marine Containers Group have posted sharp drop in profit in the past years. Voice for reform is getting louder.

Suggestions include defining the division between government and business, modernising the company management system and reducing the SOEs' role in carrying out the government's economic agenda.

Experts expect some reform proposals to be unveiled during the third plenary session of the 18th CPC Central Committee.

"The third plenum is likely to set the tone for the SOE reform. I think the reform is to introduce market competition, build an innovative corporate structure and diversify the equity holders. However, reform could be a gradual process," said Chen Liuqin, Director of China Institute of Energy Economics.

Some concrete steps have already been taken, with private investment allowed into some areas in energy and finance, including "blocks for shale-gas exploration."

To continue the reform will be a daunting but crucial task for the Chinese leadership.

(CNTV.cn November 9, 2013)


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