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China issues blueprint for state industry overhaul

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China issues blueprint for state industry overhaul

September 14
23:17 2015

China’s Communist Party has issued a long-awaited blueprint for overhauling bloated state industries even as it aims to retain the party’s dominance in the economy. The plan comes at a time when the government of President Xi Jinping is under pressure to reverse an economic slowdown and reduce reliance on trade and investment as drivers of growth. Communist leaders have promised to give entrepreneurs and market forces a bigger role but insist state ownership will remain the core of the economy.635572339866434100-AP-China-Financial-Markets

The plan issued late Sunday reflects the complex path the party walks in trying to develop the world’s second-largest economy while retaining its monopoly on power. It calls for state companies to face more free-market competition, to become financially self-supporting and to be clearly divided between commercial competitors and those that serve social purposes. It gives no details of how individual companies — some of which in banking, oil and telecoms are among the largest in their global industries — will be treated.

Rather than reducing the party’s role, the plan says it will “strengthen party leadership” of state companies. The plan gives no time frame for changes but promises a “decisive outcome” by 2020. Reform proposals have faced opposition from party factions that benefit from their ties to politically favored industries and regulators who don’t want to see their status diminished, according to businesspeople and economists. Pressure for change has mounted as Chinese economic growth tumbled to a two-decade low of 7.4 percent last year and is forecast to fall further to about 7 percent this year.