NBC:

It is said that the leading role of the state-owned economy is the foundation of what is described as socialism with Chinese characteristics. But this seems to be a source of dispute, with major international criticism that this system distorts the market and gives Chinese state-owned enterprise unfair advantages. Has the Party plenum discussed this as an important issue for improving China's governance system? Thank you 

Xu Lin:

Mr. Han will answer this question.

Han Wenxiu:

This issue has become a matter of great concern. I would like to respond to it from two aspects.

Generally, the state-owned enterprises (SOEs) in China have assimilated themselves into the socialist market economy. During the past 40 years or so of reform and opening up, we have continuously promoted reform of the SOEs, undertaken reforms focusing on separation of government administration from enterprise management and separation of government administration from state assets management, accelerated the establishment of a modern corporate system for SOEs, completed the introduction of a modern corporate system, improved governance over SOEs, fostered sound market-oriented operating mechanisms, pushed ahead with reforms on mixed ownership, cleaned up "zombie enterprises" in an orderly way and made progress in relieving SOEs of their obligations to operate social welfare programs. After years of efforts, SOEs have become market players that follow market rules and participate in market competition on an equal footing. In this process, the layout of the state-owned economy has also been adjusted and optimized. At present, it is mainly distributed across key industries and areas that are considered vital to national security and forming the lifeblood of national economy. In the generally competitive industrial structure, the state-owned economy actually only accounts for a small share. SOEs also undertake the functions of providing public goods and universal services.

Also, the policies and systems of fair competition and common development of economic entities under all forms of ownership have been constantly improving. The plenary session discussed this issue and stressed that it is necessary to improve the legal environment to support the development of the private economy and foreign-invested enterprises, ensure fairness-based property rights protection system, step up law enforcement to tackle monopoly and unfair competition, put in place a punitive compensation system for intellectual property infringements, work to ensure sound lawmaking, strict law enforcement, impartial administration of justice, thus promoting the comprehensive protection of all types of property rights in accordance with the law. It is also necessary to strengthen the fundamental position of competition policy and thus implement a fair competition review system. It is necessary to create a good market environment, so that all entities of different ownership can use resources and factors of production legally and equally, participate in market competition in an open and fair manner, and be equally protected by law.

In short, there's no so-called natural advantage for SOEs. In market competition with the survival of the fittest, SOEs, as an equal market entity, can only truly establish and develop their own advantages by way of enhancing their competitiveness and innovation. This is very much the case for the domestic market. And the same is true for overseas markets. Thank you!