China launched a new agency to hasten a consolidation among its weaker state-owned firms on Wednesday, in a long-awaited step towards creating leaner and more powerful national champions. The State-owned Assets Supervision and Administration Commission (SASAC), which is both a regulator and shareholder of some Chinese state giants, said the new Guoxin Asset Management Corp will take-over smaller firms outside strategic sectors.
The setting up of Guoxin confirms a report by Reuters last week that the agency could be established on Wednesday. "The establishment of the new agency offers a platform to push such enterprises to consolidate and optimise their overall efficiency," SASAC said in a statement on its website. Wang Yong, the head of SASAC, said Guoxin will only help to restructure state companies and will not serve as a state investment firm, contrary to local media reports. SASAC, which will control Guoxin, did not state the number or type of firms that will fall under Guoxin's purview.
China has for years been working on cutting the number of state firms and turning around unprofitable ones. Under SASAC's aegis, the number of state companies has fallen to 125, from 196 in the last seven years, and SASAC will like to further cut the number to under 100 this year. But after years of restructuring, the pace of reform has slowed, in part due to tension between executives in companies that are being merged. The creation of Guoxin, which was discussed over the past year, is widely seen as a move to reinvigorate the consolidation drive.