Reform SOE to invigorate market economy

The reform of State-owned enterprises is long overdue in China, and the Chinese government should accelerate the reform to inject more vitality into the private sector, said an article in China Business News (excerpts below).

Fortune magazine issued its list of the top 500 Chinese enterprises in 2013. Most are State-owned enterprises that monopolize their markets.

The Chinese government has vowed for a long time to boost the development of the private economy and carry out SOE reforms. But the basic situation has not changed.

The reason is that some vested interest groups are obstructing the reform to defend their interests.

The government should divide the SOEs into categories. SOEs should play fundamental roles in industries that are of strategic importance to national economy. SOEs should also serve as the main public service providers compared with their private counterparts.

SOEs should not compete for interests with private firms. Such SOEs should gradually withdraw from their market fields.

The government should implement different policies for different kinds of SOEs and give more support to the private sector economy in the areas of land, finance and taxation.

Private companies are important industrial innovators and job creators in China. They desperately need the government to ensure a fair market environment for constructive competition.