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Press Release for Media Briefing by the Shanghai Municipal Government on September 19, 2019

September 20, 2019

The Information Office of Shanghai Municipality held a press conference today (September 19). Bai Tinghui, Party secretary and director of the Shanghai State-owned Assets Supervision and Administration Commission (SASAC), outlined the progress Shanghai has made in the reform of state-owned assets and enterprises. Xiao Wengao, deputy Party secretary of the SASAC, also participated the briefing.

“The Implementation Plan for the Comprehensive Reform of State-owned Assets and Enterprises” (hereinafter abbreviated as the Comprehensive Reform Plan) has been approved by the State Council’s SOE Reform leaders Office. On August 21, the CPC Shanghai Committee and the Shanghai Municipal Government held a conference on the reform of state-owned assets and enterprises, marking the official start of the trial.

 

Background information of the trial reform

Since the 18th National Congress of the Communist Party of China, the CPC Central Committee, led by General Secretary Xi Jinping, has attached great importance to the reform of state-owned assets and enterprises. Xi has repeatedly stressed that it is critical to make decisive achievements in important areas and key segments. Therefore, the State Council’s SOE Reform leaders Office decided to launch comprehensive reforms of state-owned assets and enterprises in pilot areas with robust state-owned economy and good environment for innovation. Comprehensive policies will be introduced within these areas with a focus on making breakthroughs in improving state-owned assets management and transforming operating mechanisms, and promoting systemic, holistic and synergistic reforms at the regional level.

The implementation of the comprehensive reform of state-owned assets and enterprises in pilot areas is an important approach taken by the central government to deepen the country’s overall reform of state-owned assets and enterprises. The CPC Central Committee has entrusted this important mission and task to Shanghai and that has demonstrated its trust, support and encouragement.

 

Main content of the Comprehensive Reform Plan

Guided by the State Council’s SOE Reform leaders Office and led by the CPC Shanghai Committee and the Shanghai Municipal Government, the Comprehensive Reform Plan has been worked out with the support of the member companies under the Municipal SOE Reform Leaders Office .

Work objectives.

The Comprehensive Reform Plan pledges that by 2022 Shanghai will achieve a series of achievements in important areas and key segments in the reform and development of state-owned assets and enterprises, establish an SOE supervision system based on capital management, form a state-owned assets layout that meets the requirements for high-quality development, establish a modern SOE system with Chinese characteristics, give full play to the leading role of the Party committee at enterprises, build an enterprise management mechanism in line with the market rules, complete the overall listing of competitive enterprises or listing of their core business assets, and strive for a target that one-third of the enterprise groups boast internationally competitive advantages and renowned brands, one-third of the enterprise groups have domestically competitive advantages and brands with their own characteristics, and one-third of the enterprise groups have the resource allocation capability to support regional economic development and their own high-quality service brands.

2. The specialty areas of the tasks

The city shall stick to two specialty areas while carrying out the Implementation Plan of Comprehensive Reform. The city aims to create an ecological environment which is beneficial to the reform and development of state-owned enterprises in the whole region and breaking the principle of "territorial" management. Not only the local state-owned enterprises in this city can enjoy the comprehensive reform pilot policies, but also the central enterprises stationed in Shanghai and the state-owned enterprises stationed in this area can also enjoy relevant policies in the implementation plan.

By carrying out the tasks in the comprehensive reform plan, the city is to explore and promote the reform and development of state-owned enterprises in a holistic approach, to concentrate on all kinds of policies and to promote state-owned enterprises to become an important engine for implementing national strategies and building a modern economic system, and to become an important support for promoting Shanghai's high-quality development, and to give full play to the integration, linkage and radiation effects of reform.

    3.Major measures

Implementation Plan of Comprehensive Reform puts forward 26 reform measures from seven aspects: improving the management system of state-owned assets, promoting the reform of mixed ownership, stimulating the indigenous power of enterprises, optimizing the distribution structure of state-owned assets, improving the construction of corporate governance, strengthening the leadership of the China Communist Party, and strengthening overall coordination. It focuses on promoting the reform of state-owned regulatory bodies to a deeper level. The market-oriented management mechanism would be more active, the development momentum of state-owned enterprise reform would be stronger, the development level of state-owned enterprise would be raised faster, the responsibility of China Communist Party organization within the enterprises would be more solid, the state-owned capital would be strengthened, and the economic vitality, the controlling power, the influence and the risk management ability would also be strengthened continually.

 

III. The implementation status of the Comprehensive Reform plans

At present, more than 20 specific operation schemes of reform projects have been formed, covering areas such as the layout of state-owned assets, industrial integration, enterprise classification, overall listing of state-owned assets, management of state-owned enterprise executives, and other items, which are being promoted one by one.

In order to ensure the effectiveness of the comprehensive reform plan, in accordance with the requirements of "aiming at the highest standard and the best level, breaking through the fixed thinking working pattern and mindset, and realizing the reboot of reform and opening-up" set by the Shanghai Committee of the Communist Party of China and the Shanghai Municipal Government, relevant departments and administrations have been adhering to the problem-oriented, demand-oriented and development-oriented mindset, and have formulated the "Action Plan on the Implementation Plan of Comprehensive Reform Pilot Program for Shanghai’s State-owned Enterprises” (hereinafter referred to as "Action Plan").

 

IV. The overall situation of the “Action Plan”

The “Action Plan” focuses on the work plan that focuses on the key areas of the reform and sets to lay out a specific working scheme. It’s the road map for the Comprehensive Reform Plan, and special attention shall be paid toward the following five relations:

1. The relationship between the overall goal and the specified goal

The overall goal is to strengthen and expand the state-owned enterprises and promote the high-quality development of the state-owned economy. The specified goal is to enhance party building, reform, development, supervision and other aspects, and promote the state-owned enterprises to stick to their initial mission. Among them, strengthen the party building of state-owned enterprises, integrate the party building work into the corporate governance structure, give full play to the political, organizational and mass work advantages of the party organization, and realize the systematization, institutionalization and concretization of the party's leadership; promote economic reform, market-based enterprises basically achieve overall listing or listing of core business assets, functional guarantee enterprises accelerate the listing of eligible competitive businesses, financial service enterprises continue to improve their comprehensive competitiveness; optimize the allocation of state-owned assets, ensure that more than 80% of new investment is concentrated in core industry, more than 80% of the state-owned assets are concentrated in key advantageous enterprise groups. Improve the supervision of state-owned assets. Make the supervision and management system more scientific, the authorized management system more perfect, and the market-oriented mechanism of state-owned enterprises fully established.

2. Strengthening the relationship between Party leadership and corporate governance

The city will focus on "basic organization, basic team, basic style." We will do a good job in managing basic organizations; explore new ways to build regional party-building associations, state-owned enterprises and community party-building in accordance with local conditions. Shanghai will build the basic team, adhere to the principle of the Party cadres and the market mechanism, and cultivate a team of outstanding entrepreneurs. We will focus on "high-tech, rare talent,” and coordinate the construction of leading, supportive talents and young talents. We will do a good job in cultivating the basic work style and promote the implementation of the "four-responsibility coordination" and clean government. Using the "four forms" of supervision and discipline, continue to crack down corruption.

3. Serving the city's strategy and its own development

Shanghai will adhere to the principle of serving the country and the city's strategy, accelerate their own development by specifying the position. Serve 3+1 strategy. The new area in the Shanghai Pilot Free Trade Zone will focus on the construction of various functional carriers. The science and technology board and the registration system will focus on promoting the listing of qualified science and technology enterprises and form a reserve companies for listing. The integration of the Yangtze River Delta will focus on establishing a number of docking platforms, communication windows, R&D centers and functional parks. With high-quality, high-efficiency, high-level service, the city will guarantee the China International Import Expo. Implement the 4+1 brand strategy. We will focus on building a long-term investment in brand building, a scientific evaluation system, gathering talents in short, and an institutional mechanism for the full impact of the reputation of old brands. We will help the construction of the “five centers”. Aiming at the highest standards and best standards, we will create a group of leading enterprises in global industry. The city will guarantee the development of the "six major people's livelihood". Play the role of “urban floor” in urban renewal, infrastructure, public transportation, green environment, healthy old-age care, and cultural and health travel.

4. Solving the relationship between demand and reform in key areas

The city's State-owned Assets Supervision and Administration Commission will focus on three dynamic mechanisms of “energy empowerment, incentive restraint and efficiency improvement”. Among them, corporate governance empowers work. The commission will optimize management on shareholder affairs, improve the normalized information exchange, directors' performance and annual report of the board of directors and fully implement the board's major decision-making, selection and employment, assessment and evaluation as well as salary distribution. The commission will stimulate incentive and constraints to be hierarchically classified. The commission will adhere to the principle of “market-based selection, contractual management, differentiated remuneration and market-based exit” to improve the professional manager system and salary distribution system. The commission will promote multi-level, broad coverage and various types of long-term incentive and restraint mechanisms. Service companies will increase efficiency and reduce burden. The companies will take actions under the core values of the State-owned Assets Supervision and Administration Commission system “adhere to the mission, deepening reform, focus on innovation and service development”. The commission will improve the working mechanism to better serve the companies. It will study and formulate a fault-tolerant and responsibility exemption mechanism that encourages reform, innovation and further accelerate development.

The commission will actively promote optimization, strengthening and deepening the reform in three major areas. Among them, it will optimize and improve enterprise classification and assessment. Based on the strategic adjustment and development goals of the state-owned assets as well as the responsibility of the enterprises and future development trend, the classification methods of “competition, function and public service” will be adjusted to “market competition, financial services and functional protection”. The commission will refine and improve the classification authorization and assessment. It will strengthen the of sustainable development mechanism for functional protection enterprises. Functional support enterprises establish an investment and financing system ensure smooth channels and balanced development, promote the general division structure, match resources, standardize management and achieve professional and efficient operation. We will deepen the reform and development of state-owned capital investment and operation. The government will scientifically and accurately define the power and responsibility boundary of the municipal government, State-owned Assets Supervision and Administration Commission and the state-owned capital investment and operation company. The government will further play the role of promoting industrial agglomeration, transformation and upgrade, in order to promote the capital flow and value preservation.

5. The relationship between overall planning and steadily promoting and encouraging innovation

The commission will focus on the reform and development of state-owned assets and enterprises. It will conduct large-scale overall supervision work of state-owned assets. The commission will accelerate the joint cooperation between the city’s state-owned enterprises, central enterprises and state-owned enterprises in other provinces and cities. The commission will enhance the strategic cooperation mechanism between the country’s State-owned Assets Supervision and Administration Commission and the municipal government as well as promote the functional headquarters and business sectors of central enterprises to locate in Shanghai. The city will encourage state-owned enterprises to carry out joint restructuring with other provincial and municipal state-owned enterprises. It will promote "direct supervision, entrusted supervision and guide supervision" with the same frequency resonance. Through regulations, contracts and lists, it will strengthen management of property rights, investment, evaluation, income and risk control. The commission will improve the “five-in-one” management system for comprehensive budget, fund concentration, risk early warning, internal control construction and informationization. The commission will entrusted enterprises and adhere to the "universal authorization of state assets, unified supervision rules, unified management evaluation, comprehensive reform considerations.” The commission will guide the supervision of state capital, adhere to the "supervised unified rules, unified management evaluation, complementary resources and functional advantages." At the same time, it will encourage innovation, support the "double-hundred enterprises" on how to use policy tools in order to form a leading effect. It will pilot on employee shareholding work, break through the limits including number of households, enterprise level, single employee shareholding ratio and the proportion of transactions with the group.