China will allow foreign investors to participate in reforms of state-owned enterprises (SOEs) in "an orderly manner", the cabinet said on Thursday, as part of broad efforts to shake up the inefficient sector. Foreign investment will be introduced into state-owned firms via restructurings and joint ventures, as well as overseas mergers and acquisitions, the State Council, or cabinet, said in new guidelines on SOE reforms. China would "attract foreign investment in mixed ownership reform of state-owned enterprises in an orderly manner", it said.
The State Council also called for projects to pilot mixed ownership reform in areas ranging from electricity, petroleum and natural gas, to railways, civil aviation, telecommunications and defence manufacturing. National security and economic lifeline industries would remain state-owned, it said. In a long-awaited reform document published this month, the government said it would introduce "mixed ownership" to its sprawling state sector, heralding its most far-reaching overhaul of SOEs in two decades, a task that has become more pressing as the economy slows.
The document said private investors would be encouraged to buy stakes in state firms as "mixed ownership". China would improve the pricing mechanism of state-owned assets and ensure state assets sales to be "open and fair" to prevent the loss of state assets, according to the guidelines. The government manages 111 companies centrally under the State-owned Assets Supervision and Administration Commission, or SASAC. Local governments own and manage about 25,000 state-owned industrial and construction companies and the sector employs nearly 7.5 million people.