State-Owned Enterprises at a Crossroads

The blueprint for the reforms was introduced in the guideline to deepen reform of state-owned enterprises issued by the State Council in September 2015. [...] It has also proposed to bolster the role of the market in professional personnel management, which may be read as a signal to challenge the entrenched privilege of the Party apparatus in the selection of SOE leaders. [...] In the past two years, the State Council also increased the number of associated agencies: compared to 14 in the beginning, 22 ministries and committees – almost 80% of all departments of the State Council – are now getting involved in SOE reform.11 an inStitutiOnal eFFOrt tO reCentralize pOwer In the Chinese political structure of “fragmented authoritarianism,” Xi’s challenges include overcoming [...] The transition from “small” group to “large” group, according to Zhou Wang, a lecturer at Nankai University, “helps to solve the problem of fragmented and overlapping responsibilities in policy deci- sions, which contributes to future strategic planning and deployment at the central level.”13 In the meantime, Xi has changed the dynamics of the existing Central Leading Group for Financial and Econo [...] In the first half of 2016, SOE investment surged while investment by private sectors continued to fall.17 The fast expansion of SOEs contradicts both people’s expectation of the mixed-ownership reform and Beijing’s efforts to rebalance the econ- omy.