CRI:

China aims to achieve more than 70% of the goals of its three-year action plan by the end of this year, so what measures have been taken to boost the action plan? What are the difficulties? How about the work plan for the second half of the year? Thank you. 

Peng Huagang:

Thanks for your questions. The three-year action plan has been the top priority of the SOE reform in recent years. Compared with the reforms of previous years, the promotion of the three-year action plan has its own characteristics. As we often say, we should advance the three-year action plan in accordance with the requirements of being measurable, assessable, and verifiable, and by taking real actions. We should also focus on integrating the Party's leadership into corporate governance, and work on improving efficiency, promoting innovation, defusing risks and standardizing accounting. Specifically, there are three characteristics.

First, systematic advancement. We printed and distributed work reports, refining the tasks of the three-year action plan into 337 specific measures, and specifying objective requirements, forms of achievements and timelines. State-owned enterprises and localities have also formulated work reports, putting forward 11,913 and 3,679 reform measures respectively, and thus making the reform tasks detailed, practical and specific. Taking work reports as the focus of our efforts, we have established at all levels a system of written pledges and a system of "holder of primary responsibility," and made sure that responsibilities are fullfiled at all levels. The intensity of work has been unprecedented. 

Second, penetrable promotion. In the past, we advanced reforms step by step. This time, we have been working at a high level to make extensive efforts to move forward with a checklist of reform measures and time-bound reform tasks. We established the work promotion system of monthly meetings, quarterly reviews, semiannual reports and a year-end summary. The monthly meetings are held through remote video link, directly involving the important secondary and tertiary subsidiaries to remove obstacles of the "last one kilometer" of reform policy implementation. We found this problem a few years ago: some enterprises have done well in promoting reforms through layer-by-layer arrangements, while some do not know how to reform. The three-year action plan has helped solve this problem once and for all through penetrable operations. 

Third, quantitative supervision. An online supervision system was established, setting up 94 collection indicators and 26 calculation indicators for centrally administered state-owned enterprises and 79 collection indicators and 34 calculation indicators for local enterprises. The system summarizes and informs the accomplishment of key tasks monthly to identify, analyze and solve problems in time, effectively playing the role of dynamic monitoring, data collection, regular summaries and real-time supervision. During the process of promoting the three-year action plan, these measures are really innovative and the promotion made the tasks of reform clearer for enterprises at various levels and provided greater reform motivation and pressure. During the process of our supervision, we will directly send a supervision letter to the company if we think there is a problem and ask the chairman of the company to read it. This method has achieved good results. 

According to the current situation, many institutional problems have been satisfactorily solved through the three-year action plan of SOE reform. For example the following tasks have entered their final stages, with fulfilment rates of more than 97%, 98% and even 99%: relieving SOEs of their obligations to provide water, electricity, heating and property management services to their employees' homes; reforming medical and educational institutions and collectively owned factories run by SOEs; and socialized management of retired employees. The task of relieving SOEs of their obligations to operate social programs as well as other longstanding problems will soon be resolved once for all. 

The reform has also enriched the modern management system. By focusing on the tenure system and contract management of the executive level at SOEs and deepening the reform of the personnel, labor and income distribution, SOEs have seen increased vitality and effectiveness. In addition, their employees are demonstrating more enthusiasm and creativeness at work.

There are many good examples. Not long ago, we held a meeting at China FAW Group Corporation (FAW) and asked some central SOEs which have seen quite effective reforms to share their experiences. For example, China First Heavy Industries (CFHI), as we all know, it is a Qiqihar-based SOE for heavy equipment and machinery. General Secretary Xi Jinping visited it twice. The leadership of the heavy machine maker has been resolute in applying the tenure system and contract management of the executives to the company. The goal is to remove the rigid evaluation bondage so that the selection of management staff can be based on their performance. If an executive cannot meet 60% of the target income and 70% of the target profit, the person will be removed from the post. Moreover, through market-based recruitment and employment policies, the company has canceled 187 management units, laid off 2,355 staff and lowered its corporate burden by 21%. Such ambitious moves have stimulated the company's vitality and helped improve the company's performance. Thanks to the reform, CFHI's annual profit growth has maintained 131% during the past three years.

Another example is FAW, which has intensified its market reform, especially in terms of personnel, labor, income distributions and management units. The reform started from its headquarters and expanded to its subsidiaries. A total of 28,000 staff participated in the re-recruitment process for the company's job posts, in which 1,700 defeated went into a round of training to increase their competency for another chance of re-employment. The process has led to a 16.7% adjustment in the company's senior managers and attracted much public attention. Over the past years, its self-developed Hongqi brand has seen a surge in sales from 4,000 in 2017, 30,000 in 2018 and 100,000 in 2019, to 200,000 in 2020. This year's sales target is 400,000. The sales are growing in line with the improvement in production. Thanks to its effective reform, the company is seeing stronger vitality and improvement in technological innovation, operations and manufacturing.

The above are the main features of the three-year action plan for SOE reform, which have brought tangible progress. In the next step, we will follow the decisions of the CPC Central Committee and the State Council as well as the requirements of the Leading Group of the SOE Reform of the State Council, strive to complete 70% of the goals by the end of this year, and meet all the reform targets of the action plan by July 1 next year.

Xing Huina:

As there are no more questions, today's press conference is hereby concluded. Thank you to Mr. Peng and friends from the media. Goodbye.

Translated and edited by Xu Xiaoxuan, Wang Qian, Xiang Bin, Huang Shan, Qin Qi, Yuan Fang, Wang Yiming, Wang Yanfang, Zhang Jiaqi, Wang Zhiyong, Dong Qingpei, Huang Shan, Zhang Rui, Chen Xia, Zhu Bochen, Yang Xi, Liu Qiang, Guo Yiming, Li Huiru, David Ball, Jay Birbeck, and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.