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Backgrounders> Business
UPDATED: January 10, 2007 NO.2 JAN. 11, 2007
Background of Central SOE Reform
Central SOE reform began in 1979.

Before 1979, the government was responsible for the management and operation of all state enterprises, and their profits were also owned by the government. At that time, state enterprises were called state-run enterprises.

1979-84: State-run enterprises made the first step of reform. They began to have more decision-making rights for operation.

1985-93: Ownership and management of state-run enterprises were separated. State-run enterprises thus became state-owned enterprises.

1994: SOE reform began progressing toward the goal of "establishing the modern corporate system." Central SOEs became the key object of reform. The Corporate Law was formally implemented in 1994, marking a new phase for SOE reform.

1999: The CPC Central Committee released a document on several important issues related to SOE development and reform, indicating that SOE reform entered another phase of "strategic adjustment in the distribution of the state economy."

2003: The SASAC was founded, supervising 196 central SOEs on behalf of the Central Government. Thus, adjustment in distribution and structure of the state economy began to be subject to unified planning and market-oriented operation by the SASAC. Moreover, the SASAC as a representative of the investors of all SOEs, can, to some extent, facilitate the improvement of large SOEs' corporate governance.

December 2006: The SASAC, for the first time, clearly specified industrial sectors in which the state economy should have absolute control, be influential or play a leading role. According to SASAC's plan, by 2008, non-performing SOEs should exit the market, and by 2010, the number of central SOEs should total 80-100, among which, 30-50 should be internationally competitive.

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