Read in Chinese

Speakers:

Mr. Wang Hongzhi, vice chairman of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC)

Mr. Lin Qingmiao, director general of the Bureau of Enterprise Reform of the SASAC

Ms. Liu Shaowei, deputy director general of the Bureau of Financial Oversight and Operational Evaluation of the SASAC

Mr. Fang Lei, deputy director general of the Bureau of Scientific and Technological Innovation of the SASAC

Chairperson:

Ms. Xing Huina, deputy director general of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

July 26, 2024

Xing Huina:

Ladies and gentlemen, good morning. Welcome to this press conference held by the State Council Information Office (SCIO), as part of the series "Promoting High-Quality Development." Today, we have invited Mr. Wang Hongzhi, vice chairman of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), to brief you on relevant developments and answer your questions. Also present today are Mr. Lin Qingmiao, director general of the Bureau of Enterprise Reform of the SASAC; Ms. Liu Shaowei, deputy director general of the Bureau of Financial Oversight and Operational Evaluation of the SASAC; and Mr. Fang Lei, deputy director general of the Bureau of Scientific and Technological Innovation of the SASAC. Now, I'll give the floor to Mr. Wang for his introduction.

Wang Hongzhi:

Thank you. Good morning. At a time when the whole nation is deeply studying and implementing the guiding principles of the third plenary session of the 20th Central Committee of the Communist Party of China (CPC), I am very pleased to meet with you to introduce the situation of high-quality development of state capital and state-owned enterprises (SOEs). First of all, I would like to express my heartfelt thanks for your long-term care and support.

The just-concluded third plenary session of the 20th CPC Central Committee made major arrangements for deepening the reform of state capital and SOEs, fully reflecting the great importance that the CPC Central Committee with Comrade Xi Jinping at its core attaches to SOEs. People in this sector are deeply encouraged and excited. We will comprehensively and deeply study and understand, and effectively implement the decisions.

Since the beginning of the new era, the SASAC and centrally-administered SOEs have resolutely implemented the major directives of the CPC Central Committee and the State Council, firmly promoted high-quality development, and fully and faithfully applied the new development philosophy on all fronts. This has led to substantial, transformative changes in the reform and development of enterprises. Quality and efficiency have significantly improved, the intensity of sci-tech innovation has reached unprecedented levels, the layout and structure have been continuously optimized, the pace of high-quality development has been accelerated, and the strategic support of the state-owned sector has been brought into full play. These achievements can be seen in five areas:

First, the ability to create value has been significantly enhanced, providing a more solid foundation for the high-quality development of enterprises. We have continuously improved the high-quality development index system, implemented special actions such as quality and performance improvements, value creation and brand leadership, and continuously promoted enterprises to become stronger, better and larger. By the end of 2023, the total assets of centrally-administered SOEs reached 86.6 trillion yuan, 2.8 times that of the end of 2012. Added value, revenue and profits have all doubled compared with 2012. Efficiency indicators such as operating income profit margin and overall labor productivity have steadily increased, and the economic operation has maintained steady progress and improved in terms of quality and efficiency.

Second, the capability for sci-tech innovation has rapidly increased, providing stronger momentum for the high-quality development of enterprises. We have fully leveraged the advantages of the new system for mobilizing resources nationwide, making sci-tech innovation our top priority, deeply integrating into the national innovation system, optimizing the innovation ecosystem, strengthening innovation coordination, and focusing on breakthroughs in key and core technologies. During the 13th Five-Year Plan (2016-2020) period, the R&D investment of centrally-administered SOEs increased by an average annual rate of 14.5%. Over the past two years, R&D investment has exceeded 1 trillion yuan annually, achieving a series of landmark results in fields such as aerospace, deep sea, energy and transportation, and making significant breakthroughs in key materials and core components.

Third, the optimization and adjustment of the layout structure have been significantly advanced, providing broader space for high-quality development. We have focused on our main business, developed the real economy and built a modern industrial system. We have made substantial efforts in strategic reorganization and professional integration, leading to the restructuring and merging of 28 groups of 50 enterprises, and the establishment and acquisition of 15 centrally-administered SOEs. We have vigorously promoted the high-end, intelligent and green development of traditional industries, accelerated the formation of a systematic layout of strategic emerging industries, achieving a 32% growth rate in strategic emerging industry investment in 2023, with revenue exceeding 10 trillion yuan for the first time. The control and influence of the state-owned economy in important industries and key fields have been further strengthened, with new advantages in emerging sectors rapidly taking shape.

Fourth, major breakthroughs have been achieved in the reform of state capital and SOEs, further boosting the vitality of high-quality development of enterprises. We have stayed focused on our goals and adopted a problem-oriented approach to continue the implementation of a three-year action plan for SOE reform as well as an initiative to deepen and upgrade SOE reform. The modern corporate system with distinctive Chinese features has been continuously improved, and the reform to convert SOEs into standard companies has been fully completed. We have successfully relieved SOEs of their obligations to operate social programs and have resolved other longstanding problems they have experienced. Comprehensive breakthroughs have been achieved with reforms of the three systems of labor employment management, human resources and distribution. The state capital regulation system has fully leveraged its advantages in terms of specialization, systematization, rule of law and efficiency. A group of new modern SOEs have emerged, featuring new development models, new corporate governance, new operating mechanisms and new structures.

Fifth, the role played by the state-owned sector in serving the national economy and people's livelihood has been fully demonstrated, and the high-quality development achievements of enterprises have been shared among more people. We have maintained ‘for the people' as the essential attribute and have focused on serving the country's most fundamental interests. We have deeply implemented major regional strategies, actively undertaken major projects for the people's wellbeing such as the Sichuan-Xizang Railway and the west-to-east gas transmission project, solidly ensuring a stable and secure supply of basic energy and resources. Since 2013, the total tax and fee payments within the state-owned sector have exceeded 20 trillion yuan. The sector has also introduced and invested in various types of poverty alleviation funds that exceed 100 billion yuan, thus taking the lead in supporting the fight against major disasters and fully demonstrating the sector's sense of responsibility.

Next, we will resolutely implement the arrangements made at the third plenary session of the 20th CPC Central Committee, uphold and strengthen the Party's overall leadership over SOEs, deepen reform of state capital and SOEs, and work to refine the layout and structure of the state-owned sector. We will remain committed to helping state capital and SOEs get stronger, do better and grow bigger with their core functions and core competitiveness enhanced, making new contributions to building a great country and advancing national rejuvenation.

I will stop here for now. Next, my colleagues and I are willing to answer your questions. Thank you!

Xing Huina:

Now the floor is open to questions. Please identify your media outlet before raising questions.

Xinhua News Agency:

The third plenary session of the 20th CPC Central Committee made strategic arrangements to further deepen reform comprehensively and to advance Chinese modernization. The resolution that was adopted at the session put forward a series of new requirements focusing on deepening reform of state capital and SOEs. What measures will the SASAC take to implement these strategic arrangements? Thank you.

Wang Hongzhi:

Thank you for your question. As I mentioned just now, the third plenary session made systematic plans to deepen the reform of state capital and SOEs, providing both directional guidance and practical requirements as well as serving as a program of action for our work on state capital and SOEs on the new journey. This week, the SASAC held seminars for heads of central government-owned enterprises and heads of SASAC local offices to study and implement the guiding principles from the session. We initially consider focusing on five aspects:

First, we will remain committed to helping state capital and SOEs get stronger, do better and grow bigger. This is the leading goal in deepening reform of state capital and SOEs. We will continue to accelerate the removal of systematical institutional barriers that impede development through reform, so as to appropriately expand and effectively upgrade the economic output of enterprises, increasing their control and influence capacity in key industries and areas as well as providing strong support for stable and healthy economic and social development.

Second, we will accelerate the formation of new relations of production that are more compatible with new quality productive forces. This is a distinct direction of deepening reform for state capital and SOEs, as well as a defining fact of our time. We will seize the opportunities of a new round of scientific and technological revolution and industrial transformation as well as accelerate the improvement of systems and mechanisms conducive to original innovation, the development of strategic emerging industries and the stimulation of talent vitality. We will also promote the spirit of outstanding entrepreneurs and scientists, advance reforms in organizational structures, operating mechanisms and management systems, and channel various types of advanced production factors toward the development of new quality productive forces.

Third, we will enhance core functions and improve core competitiveness. This is the fundamental requirement for deepening reform of state capital and SOEs. We will focus on the country's needs and most fundamental interests, continuously increasing the functional value of SOEs to forge their unique competitive advantages, and promote enterprises to better fulfill their economic, political and social responsibilities.

Fourth, we will fully deliver on the key reform tasks defined by the plenary session. At the level of the state-owned sector of the economy, our main focus is on refining the layout of the state-owned sector and adjusting its structure as well as steering state capital toward major industries and key fields that are vital to national security and serve as the lifeblood of the national economy, toward sectors such as public services, emergency response, and public welfare, which concern our country's prosperity and our people's wellbeing, and toward forward-looking and strategic emerging industries. At the state-owned enterprises (SOEs) level, the emphasis is on refining the modern corporate system with distinctive Chinese features and building more world-class enterprises. At the state capital supervision level, our focus is on improving the institutions and mechanisms for management and oversight, strengthening strategic coordination and improving regulatory effectiveness. We will also encourage enterprises to boldly innovate and pioneer, implement differentiated and tailored reform measures according to actual conditions, and to fully stimulate enterprise vitality.

Fifth, it is especially important to uphold and strengthen the Party's overall leadership. The fundamental guarantee for successfully completing the reform tasks laid out in the third plenary session is the leadership and capacity building of the Party. We will implement the guiding principles from the national meeting on building the role of the Party within SOEs, ensure that Party leadership is exercised in every aspect and throughout the entire process of reform, leverage the important role of the Party committees (the leading Party members groups) of state-owned enterprises in the governance system, promote the deep integration of Party building with production and operations, and ensure that the reform always moves in the right direction and achieves the anticipated results.

To conclude, in the current and upcoming period, the sector of state capital and central SOEs will treat the study and implementation of the guiding principles of the third plenary session of the 20th CPC Central Committee as a major political task. We will comprehensively study, fully grasp and thoroughly implement these guiding principles, while transforming the strategic tasks arranged by the CPC Central Committee into specific actions and measures. We will forge ahead with even greater vigor to improve and strengthen our work related to state capital and central SOEs, thereby adding new momentum to the advancement of Chinese modernization. Thank you!

National Business Daily:

We have noticed that promoting the coordinated development of state-owned and private enterprises is one of the key reform tasks in the new round of deepening SOE reform. Could you please update us on the progress of this initiative? What are the main considerations and plans for the next step? Thank you.

Wang Hongzhi:

Thank you for your questions. Working unswervingly both to consolidate and develop the public sector and to encourage, support and guide development of the non-public sector is an important part of China's fundamental economic systems, and is also a strength of our system. There is a consensus that both SOEs and private enterprises are important entities in our national economy, with each playing a significant, indispensable and irreplaceable role. The SASAC has always placed great importance on the coordinated development of SOEs and private enterprises. Specific work plans have been formulated to guide and promote deep cooperation between SOEs and private enterprises in order for them to learn from each other's strengths and to compensate for each other's weaknesses, fostering mutual promotion and growth. This has achieved positive results. For more details, I will let Mr. Lin Qingmiao provide further information.

Lin Qingmiao:

Further leveraging the leading role of SOEs to promote the coordinated development of state-owned and private enterprises is a key task in deepening SOE reform. It is also an important cornerstone for building a high-level socialist market economy. In recent years, in the process of creating a new pattern of development and promoting high-quality development, we have been solidly advancing mutual promotion and coordinated development between state-owned and private enterprises. This can be summarized into "four cooperations":

The first is cooperation at the capital level. Since the initiative to deepen SOE reform, central SOEs have actively engaged in equity cooperation with private enterprises and other social capital, with amounts exceeding 390 billion yuan. As of now, central SOEs have invested in over 13,000 companies of various types through shareholding, thus achieving significant progress in capital cooperation between state-owned and private enterprises.

The second is cooperation along the industrial chains. Central SOEs have initiated joint actions, collaborating with upstream and downstream enterprises to reinforce and upgrade the weak links in the industrial chains, and to extend and solidify the industrial chains. This initiative drives the coordinated development of over 5,700 business entities. Behind each "chain leader" company there are numerous private enterprises participating and cooperating.

The third is supply chain collaboration. Central SOEs have lowered procurement thresholds and reduced transaction costs during the procurement process, thus strongly supporting the development of the private businesses. Currently, among the more than two million enterprises in the upstream and downstream supply chains that are directly driven by central SOEs, 96% are private small and medium-sized enterprises.

The fourth is cooperation in scientific and technological innovation. In strategic emerging industries and key areas for future-oriented industries, central SOEs have led to the establishment of 24 innovation consortia, collaborating with private enterprises, universities and research institutes to tackle key challenges. We have made breakthroughs in developing a large number of core technologies with independent intellectual property rights in key fields, such as industrial software, industrial mother machines, computing power networks, and new materials, etc. These advancements have made significant contributions to achieving greater self-reliance and strength in science and technology.

Next, we will improve the rules and institutions for cooperation between various enterprises including SOEs and private enterprises, continue to carry out the coordinated development and project promotion and partnering of SOEs and private enterprises, guide SOEs to build a collaborative and win-win supply chain ecosystem, encourage SOEs to expand openness and sharing of innovative resources, give full play to the strength of SOEs, private enterprises and other types of enterprises in resources, and continue to deepen cooperation for common development. Thank you!

21st Century Business Herald:

We have noticed that the overall production and business operation of central SOEs gained good momentum in the first half of this year. What are the features and highlights that are worthy of attention? What key measures will be put in place during the second half of the year that will further promote the high-quality development of central SOEs? Thank you.

Wang Hongzhi:

I would like to invite Ms. Liu to answer your questions.

Liu Shaowei:

Thank you for your interest in the production and operation of central SOEs. Since the beginning of this year, central SOEs have carried out special actions in a solid way to enhance quality and efficiency. Their economic operations have shown good development trends with stability, structure, quality and efficiency, which has effectively played a role as an anchor and ballast for the national economy. The main highlights and features can be summarized as the following, namely, "being stable in three aspects and showcasing excellence performance."

First, stable production and operation. In the first half of the year, the production and operation of central SOEs were stable and orderly, and the output of key products maintained a steady growth. For example, electricity generation and sales increased by 5.3% and 8.9% year on year, respectively, crude oil output saw a 0.9% year-on-year growth and raw coal output increased by 1.2% year on year.

Second, stable value creation. Their total profit reached 1.4 trillion yuan, an increase of 1.9% year on year. Net profit and net profit that is attributable to shareholders increased by 1.3% and 2.1% year on year, respectively, maintaining a coordinated growth with total profit.

Third, stable contributions to society. They have paid a total of 1.3 trillion yuan in taxes and fees, an increase of 0.5% year on year. The completed fixed asset investment increased by 3.3% year on year; in particular, investment in strategic emerging industries grew by 16.9% year on year and accounted for over 37% of total investments.

Their excellent performance is reflected in operating quality and efficiency. Their cumulative R&D investment reached 434 billion yuan, a year-on-year increase of 2.7%. The labor productivity on an annualized basis reached 789,000 yuan per person, a year-on-year increase of 4.6%. The revenue profit margin reached 7.4%, an increase of 0.3% year on year.

In the second half of the year, facing a complex external environment, we will focus on developing new quality productive forces and effectively advance better high-quality development of central SOEs through "three increases," "three new investments" and "three boundaries" management. "Three increases" mean that we will take the lead in increasing the production and supply of coal, electricity, oil and other important basic products, as well as transportation capacity, in a bid to ensure "increased supply;" we will make a concerted effort to enhance the efficiency of business operations, management and reform, in a bid to ensure "increased benefits;" and we will actively serve the national strategy to drive the common development of upstream and downstream industrial chains, in a bid to ensure "increased investment." "Three new investments" mainly refer to increasing investment in scientific and technological innovation and accelerating breakthroughs in technical bottlenecks in key areas; increasing investment in industrial renewal and accelerating the layout of new industries in new arenas; increasing investment in equipment renewal and accelerating the transformation and upgrading of traditional industries. The "three boundaries" management mainly refers to firmly observing financial boundaries, strictly controlling the rapid growth of debt scale while also relying on the treasury system to strengthen real-time penetration and intelligent supervision and resolutely upholding the bottom line of no major risks; stringently observing business boundaries, controlling irrelevant and excessive diversification, and concentrating superior resources to optimize main business and to strengthen the industry; strictly observing corporate boundaries, controlling the disorderly expansion of multi-layer structures, vigorously compressing management levels, reducing equity levels and the number of legal entities, and plugging management loopholes. Thank you!

CCTV:

In the current SOE reform, "enhancing core functions" has become a high-frequency word. Could you please introduce what SOEs have done in recent years to serve the country's economic and social development? What are the key arrangements for the next stage in this regard? Thank you.

Wang Hongzhi:

Thank you for your questions. Strengthening core functions is a clear requirement set by General Secretary Xi Jinping and the CPC Central Committee for SOEs. In recent years, the SASAC has guided central SOEs to focus on their mission and responsibilities, and advanced their efforts to assume duties with a holistic view and based on the overall situation, making positive contributions to economic and social development. These efforts are mainly reflected in three aspects.

First, central SOEs have created great material wealth, offering powerful support for increasing the country's economic strengths. As was mentioned in the opening remarks, central SOEs over the past decade have experienced a remarkable surge in their assets, revenue and profits. Central SOEs have contributed roughly one-seventh of the total national tax revenue through taxes and fees. Moreover, they submitted 1.5 trillion yuan of state capital gains and transferred 1.2 trillion yuan of state assets to social security funds. In 2023, central SOEs invested 5.1 trillion yuan in fixed assets, an 11.4% year-on-year increase, surpassing the growth rate of total fixed asset investment by 8.4 percentage points. This has bolstered confidence to stabilize social expectations.

Second, central SOEs have created significant strategic assets, offering strong support for the implementation of major national arrangements. They provide nearly 100% of the country's basic telecommunications services, 96% of power grid coverage, 67% of oil refining capacity, 54% of installed power generation and 25% of coal production. Central SOEs have served a crucial role in safeguarding energy resources and food security. They have actively contributed to the country's major strategies with regional development, including the large-scale development of the western region, the revitalization of northeast China, the rise of central China, and the trailblazing development of the eastern region. They have also provided effective support for the construction of the Xiong'an New Area and the Guangdong-Macao In-Depth Cooperation Zone in Hengqin. Moreover, we have actively expanded our international business layout, significantly facilitating the systematic export of China's technology, equipment and products.

Third, central SOEs have created great social benefits, providing strong support for ensuring and improving people's livelihood. They have proactively contributed to rural revitalization efforts, and successfully completed the task of offering assistance to 246 key impoverished counties designated in the national poverty alleviation efforts. They have taken the lead to promote green development, reducing the energy consumption per 10,000-yuan output value by 17% during the 13th Five-Year Plan period (2016-2020). Central SOEs have also made great efforts to help small- and medium-sized enterprises (SMEs) overcome difficulties, such as maintaining low prices for telecom services, ensuring uninterrupted power supply for those in arrears during the pandemic, waiving rents as much as possible, and establishing industrial chain financial platforms to address financing challenges for enterprises upstream and downstream. Central SOEs are committed to ensuring the supply of energy resources and power, and have participated in emergency rescue and disaster relief. After a dike breach occurred in Dongting Lake earlier this month, central SOEs in the construction sector transferred over 100,000 tons of rock and enterprises such as the China Anneng Construction Group Corporation worked day and night to plug the breached dike. Thanks to these efforts, the task was brought to completion 13 hours ahead of schedule. Throughout this period, enterprises in the sectors of energy, power, telecommunications and food maintained uninterrupted 24-hour services, demonstrating central SOEs' strong sense of duty in tough situations.

Going forward, we will make stepped-up efforts to enhance the "values" in five aspects in a bid to ensure that enterprises can better fulfill their functions and responsibilities. First, we will enhance the added value. This aims to increase the overall contribution of central SOEs to GDP, and carry out added value accounting of the public sector. Second, we will enhance the function value. To achieve this, we will establish an evaluation system for state-owned enterprises in fulfilling their strategic missions so that we're able to evaluate enterprises' operational performances and their overall contributions in a more scientific manner. Third, we will improve the added value of economy. To achieve this goal, we will strengthen the mindset of "calculating first, investing later," and optimize the allocation and layout of state capital in a bid to improve value creation capability. Fourth, we will increase the share of revenue and added value made by strategic emerging industries, and make greater efforts to foster innovation-driven, higher-quality growth. Fifth, we will enhance brand value. To this end, we will foster more brands in central SOEs, ensuring their superior quality, outstanding advantages and independent intellectual property rights. By doing so, central SOEs' brand image will be enhanced. Thank you.

Securities Times:

In recent years, central SOEs have made remarkable achievements in the industrial application of scientific and technological advances, developing a lot of advanced equipment for the country, and have been awarded many prizes in science and technology. What measures will the SASAC implement to empower central SOEs as key drivers of scientific and technological innovation? What are the key tasks?

Wang Hongzhi:

I'd like to invite Mr. Fang to answer these questions.

Fang Lei:

Thank you for your questions. We really appreciate your interest in central SOEs' efforts with scientific and technological innovation. Central SOEs have been important hubs in national innovation chains and the backbone for building the country into a strong science and technology nation. In recent years, the SASAC has taken scientific and technological innovation as top priority and have made significant efforts to encourage central SOEs to strengthen scientific and technological innovation, leading to a substantial number of major scientific and technological achievements. We have intensified our endeavors in the following four aspects in a bid to give full play to the role of central SOEs as key drivers in scientific and technological innovation.

We are vigorously advancing breakthroughs in key core technologies. We have established a three-tiered collaborative system that integrates national overall planning, organizes central enterprises to jointly tackle challenges, and encourages companies to make breakthroughs proactively. Focusing on crucial areas such as industrial machine tools and industrial software, we have mobilized millions of researchers to work on the front lines of technological advancement, thereby effectively maintaining the stability of supply chains. In fields such as quantum information, deep space, deep earth, and deep sea exploration, we have established 97 original technology innovation hubs. We have also implemented 11 special initiatives, including "Strengthening Applied Basic Research," achieving significant breakthroughs in cutting-edge areas such as controlled nuclear fusion, 6G network architecture and brain-like chips.

We are focusing on empowering industry-leading enterprises to play a leading role in integrating production, education and research. We guide central enterprises to collaborate with universities, research institutes, and upstream and downstream companies to identify major needs and distill significant scientific questions. We have established 24 innovation consortia and selected 30 leading enterprises across the industrial chain to implement a "large-scale coordinated approach." This strategy promotes full-chain innovation from basic research to industrialization. We are also building a collaborative and efficient industrial innovation organizational mechanism. Additionally, we are proactively opening markets and scenarios to various innovative entities and promoting the application of first-generation equipment and initial batches of new products. Central enterprises are accelerating their transformation into supportive markets for independently developed products.

We are focusing on deeply integrating sci-tech innovation with industrial innovation. We encourage enterprises to use new technologies to upgrade and enhance traditional industries, implement digital transformation initiatives and "AI+" special actions, and accelerate the development of high-end, intelligent and green technologies. We have launched the industrial renewal and sailing initiatives, adhering to both intrinsic development and high-quality mergers and acquisitions. We are vigorously developing nine strategic emerging industries, such as artificial intelligence and biotechnology, and six future industries, including future manufacturing and future energy. We are also implementing the Sailing Enterprise Cultivation Program to rapidly build a group of innovative state-owned enterprises that are "entering new sectors, mastering new technologies, establishing new platforms, and implementing new mechanisms." Through these efforts, we aim to foster and grow new quality productive forces.

We are fully committed to improving the system and mechanisms for technological innovation. We adhere to top-level, practical and needs-oriented principles when refining investment policies. Technological innovation assessments now cover all industrial and research enterprises, with state-owned capital allocated for supporting technological innovation reaching 83% in 2024. For 2022 and 2023, annual R&D investments exceeded 1 trillion yuan. We are enhancing development mechanisms for sci-tech professionals. We encourage enterprises to establish long-term, results-oriented incentive mechanisms and profit-sharing mechanisms for the transformation of technological achievements. We have implemented several measures to support researchers, including a separate wage system that is not subject to overall limits, improved fault-tolerance and immunity mechanisms, and greater autonomy in research activities.

Next, state-owned central enterprises will thoroughly implement the guiding principles of General Secretary Xi Jinping's speech at a national science and technology conference. We will focus on strategically critical areas by further improving institutional arrangements, increasing R&D investments, attracting and developing high-level talent, and achieving international development. Our goal is to cultivate more leading technology enterprises to provide strong support for breakthroughs in key core technologies, enhance original innovation capabilities, and lead the development of a modern industrial system. These efforts will significantly contribute to accelerating high-level technological self-reliance and self-improvement, ultimately helping to build a strong technological nation. Thank you.

The Enterprise Observer:

A new round of large-scale equipment renewal is currently proceeding smoothly. Can you provide an update on the recent progress of related work by central enterprises? What are the considerations and arrangements for future work? Thank you.

Wang Hongzhi:

Thank you for your questions. The new round of large-scale equipment renewal is an important initiative by the CPC Central Committee, focusing on the overall goal of high-quality development. This initiative is widely anticipated across society and represents a significant opportunity for central enterprises to build development advantages. Last Friday, the State Council held a special meeting to deploy additional support for large-scale equipment upgrades. Recently, the SASAC also held a special progress meeting to mobilize related work. The meeting guided enterprises to effectively utilize support policies, coordinate technological upgrades, equipment renewals, and industrial upgrading, ensure initiatives are well-executed and accelerate high-quality development. Mrs. Liu will provide more details on this matter.

Liu Shaowei:

As Mr. Wang just introduced, SASAC recently held a meeting to advance large-scale equipment renewal for central enterprises. The main purpose of this meeting was to guide these enterprises to take the lead and focus on the "five accelerations," ensuring the implementation and advancement of related key tasks.

First, we are quickly upgrading equipment to advanced ones. By swiftly replacing and renovating production devices and equipment that have long service time, low efficiency and outdated technology, we are deploying equipment that is high-tech, highly efficient and highly reliable.

Second, we are speeding up the digital transformation. We are rapidly implementing a series of projects focused on achieving an "intelligent, digital and connected transformation." This involves deeply integrating cutting-edge technologies like artificial intelligence across all aspects of the manufacturing process, rapidly upgrading and replacing outdated equipment with intelligent solutions and extensively expanding our network infrastructure with new technological advancements.

Third, we are accelerating our green transformation efforts. These efforts focus on promoting a range of eco-friendly equipment, aiming to significantly reduce pollution, cut carbon emissions, save energy and lower consumption. We are also working to improve the energy efficiency management of our equipment by rapidly updating and renovating devices and equipment with subpar energy performance. Moreover, we are vigorously planning for the recycling and reusing of resources, thereby establishing a sustainable cycle of eco-conscious product development, manufacturing and recycling.

Fourth, we are stepping up the promotion of intrinsic safety measures. A series of renovations of outdated facilities is in progress to strengthen the application of safety technologies and apparatus. In areas vulnerable to safety risks, initiatives are being implemented to replace manpower with machines, automated solutions and robots. There is an enhanced focus on online monitoring and management of various hazardous sources, with the goal of improving accident and disaster prediction and prevention capabilities.

Fifth, we are advancing our efforts to reinforce effective supply. By developing a new range of devices and equipment, we are pushing forward their applications in various fields including industrial machinery, agriculture, healthcare, education and more. Our goal is to provide technologically advanced, green, low-carbon, energy-efficient and market-adaptive equipment.  

Moving forward, we will maintain the principle of offering all possible support, thus intensifying policy backing for investors. We will guide central SOEs to align closely with the trends of the new technological revolution and industrial transformation, performing a pioneering and exemplary role during this round of extensive equipment upgrades. In the next five years, central SOEs are expected to arrange equipment renewal and renovation with a total investment of more than 3 trillion yuan. Concurrently, we mandate that central SOEs treat different types of enterprises equitably when procuring equipment, focusing on acquiring equipment that is technologically advanced and offers the best value for money. This approach will allow equipment suppliers that are distinguished by superior quality and competitive prices to stand out. Thank you!

Yicai:

Currently, the action to deepen and enhance the reforms of state-owned enterprises has passed the halfway mark. Could you comment on the effectiveness of this round of reforms? What are the key tasks for the next stage? Thank you.

Wang Hongzhi: 

Thank you for your questions. The reform of state-owned enterprises has always been a topic of concern and interest across all sectors of society, which I touched upon in my opening remarks. Specifically, this action, aimed at deepening and enhancing the reform of SOEs, represents a major arrangement by the Central Committee of the Communist Party of China focusing on the roles and missions of state-owned enterprises within the new era. It is highly consistent with the arrangements regarding the reform of state assets and state-owned enterprises made at the third plenary session of the 20th CPC Central Committee. At this stage, over half of the scheduled tasks have been completed and the results, thus far, meet our expectations. For a detailed report, I will now turn over to Mr. Lin Qingmiao.

Lin Qingmiao:

I will further introduce some specific details. In our ongoing initiatives to deepen and enhance the reform of state-owned enterprises, we are cohesively advancing both reforms regarding their functions and roles and institutional reforms, fully leveraging the synergy. Reforms of functions and roles are focused on the missions and responsibilities of SOEs in this new era, with the goal of boosting their core functions and competitive strengths. This enables them to make significant contributions in areas like technological innovation, industry control and security support, thereby better aligning with national strategies. Institutional reforms aim to remove the institutional impediments that affect the high-quality development of SOEs, and to rejuvenate their vitality further. The achievements of these deepened and enhanced reform efforts can be summarized in four aspects:

First, the structural layout has been continuously improved. We have thoroughly implemented strategic restructuring and professional integration, enhancing SOEs' capabilities in serving national strategies and improving resource allocation efficiency. We have firmly implemented industrial renewal actions for central SOEs and launched initiatives to develop future-oriented industries. Emerging sectors are thriving, realizing breakthroughs in various fields. Traditional industries have experienced rapid transformation and upgrading to become high-end, smart and eco-friendly. Second, sci-tech innovation capabilities have continued to strengthen. Many enterprises' sci-tech innovation systems have been reshaped and optimized. SOEs' principal role in sci-tech innovation has become more evident. They've achieved breakthroughs in key and core technologies with inspiring sci-tech innovations across diverse fields. For example, the Chang'e-6 mission was the world's first to collect samples from the far side of the moon and return them to Earth, the C919 large passenger aircraft has been commercialized, and the Shenzhen-Zhongshan cross-sea passage has opened to traffic. Third, the modern enterprise system with Chinese characteristics has matured. Party committees (leading Party members groups) have effectively provided direction, managed the overall situation and ensured implementation. The development of boards of directors has continuously deepened, with related systems improving, and their capabilities in formulating strategies, making decisions and preventing risks enhanced. Enterprise managers work under the tenure system and contracts, and rewards and punishments are determined strictly according to evaluation results. Market-oriented operating mechanisms have improved. Fourth, regulatory efficiency has further improved. We have carried out industry-specific and enterprise-specific evaluations, making our guidance more targeted. We've enhanced supervision and accountability, coordinating different kinds of supervision to create synergy. 

Looking ahead, we will align and integrate important tasks in deepening and improving SOE reforms with the new missions and tasks assigned by the third plenary session of the 20th CPC Central Committee through coordinated implementation. We will focus on enhancing and expanding state-owned capital and enterprises to strengthen their core functions and competitiveness, realizing new breakthroughs with a greater strategic perspective and intensified efforts. We will focus on developing new quality productive forces. In line with national strategic requirements, we will further clarify key investment areas and directions, strengthening our input and planning in research on key and core technologies and forward-looking strategic industries. We will make efforts to enhance development vitality and momentum. We will improve institutional mechanisms for strengthening Party leadership within the context of corporate governance improvement. We will enhance the quality of boards of directors and deepen reforms to the three systems for labor employment management, human resources and distribution to quickly foster new and modern SOEs and create more world-class enterprises. We will focus on improving management and supervision mechanisms and systems. We will lift restrictions while ensuring effective regulation and continuously improve the efficiency of regulation and administrative services. These efforts aim to better protect and develop state-owned assets. Thank you.

ThePaper.cn:

Could you describe the work done by SOEs to quickly foster and develop new quality productive forces through leveraging their advantages? What achievements have been made? What key tasks will be taken to tackle the issues constraining new quality productive forces going forward? Thank you. 

Wang Hongzhi:

Thank you for your questions. Developing new quality productive forces is a major strategic initiative by General Secretary Xi Jinping and the CPC Central Committee. The third plenary session of the 20th CPC Central Committee also made special arrangements in this regard. SOEs play an important role in liberating and developing productive forces, and must contribute to accelerating the formation of new quality productive forces. Since last year, central SOEs have strengthened sci-tech and industrial innovation through unprecedented efforts, achieving positive results.

On the one hand, we have enhanced efforts to spur innovation, coordinating sci-tech and industrial development. We have implemented a series of special-purpose actions to build incubators for original technologies, upgrade industries, foster future-oriented industries, and promote artificial intelligence applications. We have promoted the profound integration of sci-tech and industrial innovation, applying new technologies and modes to catalyze emerging industries and new business formats. We have made breakthroughs with many key and core technologies, created numerous landmark products and developed a number of emerging industrial clusters, with the development of new quality productive forces showing great vitality. 

On the other hand, we have optimized the ecosystem for development, issuing more effective policies regarding new fields and frontiers for development. Taking the opportunity of deepening and improving SOE reforms, we implemented a package of support policies for developing new quality productive forces. For enterprises advancing sci-tech innovation and developing emerging industries, we give additional evaluation points and treat R&D expenditures as profits. This year, more than 80% of the operational budgets of state-owned capital was used for enterprise sci-tech research and industrial upgrading. A total of 250,000 key professionals and researchers received incentives in the form of equity dividends. These efforts created a powerful synergy for developing new quality productive forces.

Overall, central SOEs have formulated a holistic approach and systematic plan for developing new quality productive forces. They have been rapidly improving relevant working mechanisms and systems across various aspects. Looking ahead, we will fully implement the guiding principles of the third plenary session of the 20th CPC Central Committee and the National Science and Technology Conference. By focusing on innovation, industrial upgrading and reforms, we will pool advantageous resources and strengths, and position central SOEs as the primary field and driving force for developing new quality productive forces.

We will work to create an innovation hub and strengthen the primary growth driver for developing new quality productive forces. Focusing on national strategic needs, the development trends of science and technology and the needs of industrial upgrading, we will practice the new system for mobilizing resources nationwide on all fronts and firmly invest in areas with extended periods of research and development (R&D), large R&D investment as well as weak willingness of participation from enterprises of other ownerships. We will establish an upgraded version of the innovation consortia, promote closer collaboration between industries, universities and research institutes, and advance innovation throughout the whole process from basic research to industrial application.

We will work to build an industry leader and further develop the core carrier for new quality productive forces. By means of equipment transformation, technical research, technological upgrading and product development, we will promote the high-end, intelligent and green development of traditional industries. We will give priorities to both endogenous and extended development, continue to improve mechanisms for fostering emerging industries and step up efforts in planning development of new areas and new arenas.

We will work to create a pacesetter for reform and better adapt the relations of production to new quality productive forces. We will speed up the reform of organizational forms and management modes of enterprises, adopt more active, open and effective policies on talent and flexibly carry out various forms of medium and long-term incentives to encourage innovation and creativity. At the same time, we will develop new ways of organization, enhance cooperation among the upstream, midstream and downstream enterprises of the industrial chain and continue to optimize the industrial ecosystem for developing new quality productive forces.

Meanwhile, we also feel that developing new quality productive forces is not only a question that central SOEs must answer but also a common question for various market entities. We will deepen cooperation with various enterprises in new areas and new arenas to jointly develop new technologies and build new industrial ecosystems, advancing the development of new quality productive forces with concerted efforts and continuing to foster new growth drivers and new strengths.

Thank you!

Xing Huina:

Due to time constraints, we will take the last two questions.

Economic Information Daily:

We are concerned about central SOEs' development in the artificial intelligence industry. Previously, the SASAC has launched an initiative to advance AI-driven industrial upgrades. What progress has been made so far? What's the follow-up plan? Thank you.

Wang Hongzhi:

Thank you for your questions and your attention to central SOEs' development in the artificial intelligence industry. Artificial Intelligence is an important driving force for the new round of scientific and technological revolution and industrial transformation. It is also a key engine for the cultivation of new quality productive forces. For a period of time, central SOEs have made active explorations and bold attempts, with positive progress being made in the fields of computing power, data, large models and scenario applications. The development of artificial intelligence relies on cooperation and ecosystems. We will work with all sectors of society to make joint efforts within infrastructure, supply, demand and policy in order to advance industrial development with higher quality and faster speed, better empowering the high-quality development of the economy and society. With regard to this, Mr. Fang Lei will give you a detailed introduction. 

Fang Lei:

Well, let me answer your questions specifically. In recent years, the SASAC has been thoroughly implementing General Secretary Xi Jinping's important expositions on accelerating the development of artificial intelligence. We have conformed with the situation and taken the initiative to accelerate the development of artificial intelligence, stressing overall planning in our work. We have also taken it as the major direction for initiatives to advance industrial upgrading and foster new enterprises for emerging industries as well as formulated and issued action plans. We have organized symposiums on advancing the development of artificial intelligence for central SOEs, launched the AI+ special program, and, as Mr. Wang Hongzhi just mentioned, have made simultaneous efforts in computing power, data, algorithm and applications, with positive progress achieved mainly in four aspects. 

The computing power infrastructure has been consolidated at a faster pace. As of the end of June, the scale of intelligent computing power of central SOEs had doubled year on year. Massive computing clusters comprising 10,000 GPUs have been built in cities including Shanghai and Hohhot. The computing power platform has initially realized multi-core heterogeneous computing power scheduling, effectively supported the training and iteration of general AI large models with a parameter of 100 billion and above, and become more independent and controllable, providing solid support for large-scale application.

The development of AI basic models has been advanced steadily. We have supported general AI large models, such as Jiutian and Xingchen, to strengthen technical breakthroughs and ecological cultivation, and to push forward multimodal large models and cross-modal image generation capacities to catch up with the leading level in China. We have continued to promote the empowerment of large models to industries and have led central SOEs, private enterprises and institutions of higher learning to jointly build models for the industry.

Scenarios for application have been built at a faster pace. Over a hundred application scenarios have been built in areas such as new materials, communications and manufacturing. Large AI models have been primarily applied in areas including electricity, transportation and petrochemicals. Significant progress has been made in reducing costs and increasing efficiency in the areas of scientific research, production and customer services. A batch of high-quality datasets have been developed in such fields as logistics, finance and healthcare. Data governance tools have been developed and value-added services have been gradually offered, such as data processing.

The role in driving the development of industry has been continuously enhanced. Many central SOEs released standard products including software factories and 5G+AI new calling services at the 7th Digital China Summit and the World Artificial Intelligence Conference. They have strengthened cooperation with private enterprises such as Huawei and iFlytek in areas including intelligent networked vehicles and energy and chemical industries, formed supply and demand docking and have jointly developed and promoted the application of large AI models for the industry, creating a sound industrial ecosystem. 

Next, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) will accelerate the development of the artificial intelligence industry through application demonstrations. Centrally administered state-owned enterprises (SOEs) are confident, determined and capable of seizing strategic opportunities. They will work with various partners to provide intelligent computing resources, transform application scenarios and cultivate the industrial ecosystem. This will involve first to thoroughly explore and fully open high-value scenarios, as well as conducting supply-demand cooperation to create a set of industry application demonstration benchmarks. Second, exploring high-quality dataset standards and construction paths, thus building high-quality datasets for key industries in batches. Third, orderly advancing the construction of intelligent computing centers and platforms for both scheduling and operating computing power, as well as strengthening intelligent computing capacity supply to better serve small and medium-sized enterprises. Fourth, focusing on cutting-edge technologies to enhance foundational large model capabilities, improving large model evaluation systems, exploring and establishing industrial development communities and stepping up efforts to empower others. Thank you!

Xing Huina:

Last question.

Phoenix TV:

I'd like to ask a question about the Belt and Road Initiative (BRI). We know that in recent years, centrally administered SOEs have implemented the BRI, creating a number of major projects and landmark initiatives, such as the Jakarta-Bandung High-speed Railway and the China-Laos Railway. As the BRI enters a new stage of high-quality development, how will SASAC and centrally administered SOEs seize this historic opportunity to further promote higher quality and higher level development of the BRI? Thank you.

Wang Hongzhi:

Thank you for your question. Centrally administered SOEs are an important force in China's participation within international competition and cooperation and in the high-quality cooperation under the BRI. Since President Xi Jinping proposed the BRI in 2013, the central SOEs have actively engaged in this great practice. They have invested in and cooperated on over 5,000 projects in participating countries and regions, improving their international operations while creating significant economic and social value for partner countries. The specific achievements are reflected in three aspects:

First, we have deepened infrastructure cooperation. Traditional infrastructure cooperation has progressed steadily and new types of infrastructure cooperation has been actively carried out. A number of landmark projects and demonstration projects have been completed. For example, in the nine months since the Jakarta-Bandung High-speed Railway began operations, it has carried over 4 million passengers. Additionally, telecommunications companies' overseas service networks cover more than 40 participating countries, and the SEA-ME-WE 5 undersea cable project has greatly enhanced communication capabilities along the route.

Second, the focus on green development has become more prominent. We have actively practiced ESG concepts with these enterprises undertaking about 300 key clean energy projects, including hydropower, wind power and photovoltaic projects. Landmark projects such as the Belo Monte UHV DC Transmission Project in Brazil and photovoltaic power station in Qatar are operating smoothly, effectively helping host countries in their green transformation and low-carbon development.

At the same time, we have delivered more benefits to local people. These projects have created nearly one million jobs locally. Centrally administered SOEs actively engaged in livelihood projects. For instance, the Hualong One project that we invested in and built for Pakistan has met the electricity needs of two million local people, while the Côte d'Ivoire urban water supply project benefited 2.3 million people.

Last year, President Xi Jinping delivered an important speech at the third Belt and Road Forum for International Cooperation, proposing eight major actions. The recently held third plenary session of the 20th CPC Central Committee further made major arrangements for improving mechanisms to promote high-quality cooperation under the BRI. The central SOEs will thoroughly implement these plans, leveraging their advantages and strengths, deepening opening up and cooperation as well as accelerating the high-quality development of enterprises' international operations.

We will focus on expanding new channels for interconnectivity, deepening practical cooperation in traditional fields, such as infrastructure, and steadily expanding cooperation in new areas, such as health, green development and digital technology, to shape a new landscape of interconnectivity.

We will focus on creating new benchmarks for cooperation projects, deepening international cooperation in production capacity and equipment manufacturing as well as ensuring the construction and operation of benchmark projects, such as the Jakarta-Bandung High-speed Railway, the Hungary-Serbia Railway and the China-Pakistan Economic Corridor. At the same time, we will actively address livelihood needs and build more "small but beautiful" projects with considerable economic and social benefits.

We will focus on consolidating new cornerstones for secure development, adhering to market-oriented, law-based and internationalized operations. Thus, we will firmly establishing compliance awareness to strengthen risk prevention and control systems, ensuring the safety of overseas projects and personnel as well as helping to promote the steady, continued and high-quality cooperation under the BRI. Thank you!

Xing Huina:

Today's press conference ends here. Thank you to our speakers and to all of our media friends. Goodbye, everyone.

Translated and edited by Wang Yiming, Wang Qian, Li Xiao, Wang Yanfang, Zhang Rui, Huang Shan, Yan Bin, Wang Wei, Gong Yingchun, Yuan Fang, Qin Qi, Li Huiru, Liao Jiaxin, Liu Sitong, Xu Kailin, Zhang Junmian, Cui Can, David Ball, Rochelle Beiersdorfer, and Jay Birbeck. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.