China

Chinese Government Reportedly Selects SDIC and COFCO to Initiate SOE Reform

This article was originally published on July 1, 2014 at 12:17 am EST

Summary:

  • The Chinese government has reportedly selected five companies, including State Development & Investment Corporation (SDIC), COFCO Group and China National Building Material Company (HK: 3323) to initiate the reform of state-owned enterprises (SOE).
  • The Chairman of China National Building Material, Zhiping Song, confirmed the news while SDIC and COFCO made no comment.

Why It Matters:

  • State-owned enterprises have been accused of having monopoly positions and low efficiency for a long time. During the Chinese People’s Political Consultative and National People’s Congress, which was held in March, reform plans for state-owned enterprises was a challenging topic and it involved many different ministries and local governments. As a result the Chinese government commenced reform with only five selected companies.
  • The China Resources Group was also selected by the government but was removed from the list after the police department began investigations for alleged corruption of its chairman Ping Song.
  • Companies controlled by the five selected SOEs, including SDIC Power Holding Co. Ltd. (CH: 600886), SDIC Xinji Energy Co. Ltd. (CH: 601918) and China Foods (HK: 0506), are expected to- benefit from the reform.