Wall Street Journal:
Hello Ms. Shen, you just mentioned that, since last year, SASAC has been attaching great importance to the role of the reform plan of making central SOEs "leaner and healthier for better performance." My question is, in the actual operation of the process, are there any contradictions and conflicts between the goals for steady growth and deleveraging?
Shen Ying:
Thank you for your question. The reform plan of making central SOEs "leaner and healthier" is an important measure in deepening supply-side structural reform. It is an effective way to improve the quality and efficiency of the central SOEs. At the beginning of the year, SASAC proposed 58 specific measures covering eight aspects in the 2017 plan of "leaner and healthier for better performance." The purpose was to tap potential and improve resource allocation efficiency. We have been earnestly implementing the program for cutting overcapacity, destocking and deleveraging, while in particular increasing productivity, focusing on risk control and improving quality and efficiency.
For example, concrete measures have been taken in "condensing the managerial tiers and cutting legal person units of enterprises." SASAC has carried out the campaign of "Reducing the Management Levels in Central SOEs" since May 2016, requiring a cut of central SOEs' subsidiary legal entities by about 20 percent and a reduction of management levels to within four tiers over a period of three years. Over the past year, SASAC, together with the central SOEs, vigorously promoted the implementation of [this program], and has made significant progress. As of the end of June 2017, 5,997 central SOEs' legal person units had been cut, producing labor cost savings totaling 26.8 billion yuan and management cost reductions of 10.2 billion yuan.
Another example is dealing with the historical problems of SOEs under the central government and transferring their obligations of "supplying water, electricity, heat (gas) and real estate property management." Currently, things are going smoothly with those SOEs in spinning off their social functions and solving problems left over from history. By the end of June 2017, over 50 percent of the work had been completed by those SOEs under the central government to spin off and transfer their obligations of "supplying water, electricity, heat (gas) and real estate property management" in their residential communities. Pilot programs for social management of SOE retirees have been carried out in five cities, namely Shanghai, Chongqing, Dalian, Jixi and Changsha. All are now on course to scale up by the end of the year based on the cities' practice and experiences. The transferring of SOEs' social responsibilities in regard to community management, fire control, healthcare and education is also going ahead smoothly. As we are now halfway towards the deadline, half of the work has been completed. I believe we are bound to complete our program to make SOEs under the central government leaner and healthier while improving their performance and efficiency.
SASAC attaches great importance to risk prevention of central SOEs as an important basis for stable growth. It has implemented control on both debt ratios and debt scale for some enterprises with high debt. The administrative efforts have been strengthened through the management of budget, personnel assessment, remuneration and investment.