China Economic Information Service:

The State-owned Assets Supervision and Administration Commission (SASAC) of the State Council put forward operating goals for China's centrally-administered state-owned enterprises (SOEs) this year, which is to promote net profits and total profits of central SOEs to grow faster than the national economy. The profit margin of operating income, the amount of R&D investment, and the per capita labor productivity must significantly increase. Meanwhile, we must maintain a stable and controllable asset-liability ratio. In the second half of the year, what are the key arrangements for central SOEs to achieve these goals? Thank you.

Peng Huagang:

Thank you for your question. When I introduced the situation previously, I mentioned the "two benefits and four rates," around which your question revolves. This is also a new target framework for central SOEs depending on high-quality development. The "two benefits and four rates" target entails new requirements for the operation and development of central SOEs. The requirements you just mentioned were the goals set at the beginning of this year. In order to better achieve these goals, we will work mainly in the following aspects:

First, we will adhere to these goals and promote the continuous improvement of the operating performance of central SOEs. Focusing on the goals and tasks set at the beginning of the year, we will comprehensively leverage tools such as budget guidance, assessment, and incentives to promote the "two benefits and four rates" to achieve "two highs, three increases, and one stability." The "two highs" refer to the fact that the growth rate of net profit and total profit should be higher than that of the national economy. The "three increases" means that the profit margin for operating income, the amount of R&D investment, and the per capita labor productivity must significantly increase. "One stability" means that we need to maintain stability and control of the debt-to-asset ratio.

Second, we will strive to improve quality and efficiency in the high-quality development of central SOEs. Focusing on expanding domestic demands as the strategic fulcrum, we will actively participate in the construction of new infrastructure and new urbanization initiatives and major projects, undertake projects with high return rates, high added value, and high technological value, and constantly explore and develop new growth areas. We will strengthen cooperation across industry chains and coordination within the industry. We will strengthen the infrastructure construction cooperation and share benefits together in industries such as communication towers, oil and gas pipeline networks, ports and wharves. We will actively and steadily carry out international operations in a stable and orderly manner and promote higher-level international cooperation in fields like infrastructure construction, exploitation of energy and resources, and equipment manufacturing.

Third, we must step up structural adjustments and promote the continuous optimization of the distribution of state-owned capital. Focusing on building a new development paradigm and serving major national strategies, we will further adjust and optimize the distribution structure of state-owned capital, strictly implement the negative list of investment projects, and vigorously advance the disposal of the non-main business, non-dominant business, and the elimination of inefficient and idle assets. We will steadily promote strategic reorganization and professional integration and accelerate the construction of a modern industrial system.

Fourth, we must strengthen reform and innovation and bolster the momentum and vitality of central SOE development. We will carry out the three-year action plan for the reform of state-owned enterprises to ensure that more than 70% of the three-year reform tasks will be completed in 2021, and greater and more substantive results can be achieved in key areas. We will tackle key projects concerning central SOEs, continuously improve capacity for independent innovation, and strive to build pacesetters in original technology and extend modern industrial chains.

Fifth, we will work to prevent and defuse risks and promote central SOEs to effectively safeguard national economic security. We will further consolidate the results of bringing down leverage and reducing debt, identify bond redemption risks, and strictly prohibit debt evasion. We will prevent financial business risks, strictly control increments, speed up the optimization of stocks, prevent funds from being diverted out of the real economy, and promote the construction of the treasury management system. We will employ information technology and intelligent means to strengthen capital management and prevent capital risks.

Judging from the situation in the first half of the year, if we can implement these measures in the second half of the year, we will surely be able to accomplish this year's goals and tasks and make greater contributions to overall economic and social development. Thank you.