Xi Jinping calls for China’s state-owned enterprises to be ‘stronger and bigger’, despite US, EU opposition

Beijing is eyeing more state-led monopolies after they were found to be most effective in complying with government demands during the coronavirus

President said state firms proved their value in ‘both pandemic control and industrial production’, but efficiency of China’s state sector remains an issue of contention

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PetroChina and Sinopec, two of China’s state-owned oil giants, spun off their pipeline assets into a new state-owned vehicle called PipeChina in the past year. Photo: Shutterstock

Published: 7:15pm, 3 Nov 2020Updated: 11:03pm, 3 Nov 2020

An agency led by President Xi Jinping to advance institutional changes in China has approved a new plan to make state-owned enterprises “stronger, better and bigger”.

Monday’s decision by the Central Commission for Comprehensive Reforms to “optimise and restructure the state economy layout” – a euphemism that generally points to government-led mergers and the consolidation of various state-owned companies, with ornamental participation by private investors – came after Beijing found its state-owned enterprises (SOEs) to be more reliable in answering the government’s calls during the coronavirus.

China’s “adjustment” of its state sector is aimed at “serving national strategic goals and adapting to high-quality growth”, and state firms will dominate areas of “strategic security, industrial leadership … and public services”, according to an official statement released through the Xinhua news agency.

And the ultimate goal is to “continuously enhance the competitiveness, innovation capability, the power to control, the power to influence and the risk-management capabilities” of China’s SOEs.

The plan serves as further evidence of an emerging trend in China’s economy – Beijing is giving the state sector a bigger role to play in economic activities, despite open complaints from the United States and the European Union. China’s SOE’s have been the prime target of an EU proposal to step up scrutiny of their “unfair advantage” over counterparts in Europe, in response to growing concern about Chinese investments there.

In a recently published speech by Xi made in April, when China declared an initial victory in bringing the coronavirus outbreak under control, the president said state firms had proved their value in “both pandemic control and industrial production”.