context: The SOE Assets Law, effective since 1 May 2009, is undergoing its first revision. As mixed-ownership reform and corporatisation deepen, the existing law no longer fits the PRC's evolving SOE governance. The revision aims to give recent reforms a firmer legal basis, close gaps in state asset supervision and balance stronger Party-state oversight with efficient SOE operations. As SOEs take on a greater role in advancing national strategic priorities.
The new draft on SOE Asset Law responds to unclear regulatory authority, weak oversight and incomplete governance rules, says Weng Jieming 翁杰明 National People's Congress Financial and Economic Affairs Committee vice chair. It proposes
- centralising supervision of operational state assets
- refining state capital investment and operation
- clarifying State-owned Assets Supervision and Administration Commission's authority to guide local state asset supervision and draft regulations
- distinguishing governance for wholly state-owned, state-controlled and mixed-ownership firms
Putting regulatory duties into law, paired with specialised regulators and more flexible policy, will strengthen rule of law and lift supervision quality, says Zhou Lisha 周丽莎 Tsinghua Institute for Modern Chinese SOEs research director.
Deepening SOE reform requires legal footing, says Weng. The revisions write recent reform gains into law. They
- elevate gains from the '1+N' policy package
- formalise classified SOE management based on strategic function
- establish a state equity director system and a corporate governance section for state-funded firms
Codifying reform experience will help develop the modern enterprise system with Chinese characteristics and deepen the 'Two Consistencies' principle: pairing party leadership with corporate governance, says Zhou Lisha 周丽莎.
The draft also addresses public concerns over state capital use and SOE accountability by
- directs state capital returns to the public budget for livelihood spending, and requires state-owned and state-controlled firms to fund social insurance
- tightens procurement and supply chain governance across the full procurement process
- requires overseas SOE operations to comply with local law and customs
- establishes due diligence exemptions for managers of state-funded enterprises
The paired moves on accountability and fault tolerance aim to reduce risk aversion and encourage initiatives.