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Reforming State Owned Enterprises: Trends and Paths

China Review News published a commentary on the reform of state-owned enterprises (SOEs). According to the article, the reform has gone through three stages. The first stage was the entire 1980s when the reform priority was to invigorate the SOEs by loosening up the planned economy mechanism and implementing the open door policy. The second stage was from the 1990s to the early 2000s. In the competition between SOES and privately owned companies, some SOEs did not survive the market mechanism, while others thrived. The national economy has become one in which SOEs coexist with privately owned companies.

“The third stage is the last stage of SOE reform, the core issue being the exit of the SOEs. We are now in this stage. … The process of the exit of SOEs from the economy involves first, classification and then, gradual phasing out. Specifically, the first step is to divide the SOEs into two categories: competitive and non-competitive. Then the exit of competitive SOEs and the reform of non-competitive SOEs will be carried out concurrently.”

Source: China Review News, February 13, 2013