State-owned enterprises of China

A state-owned enterprise is a legal entity that undertakes commercial activities on behalf of an owner government. Their legal status varies from being a part of government to stock companies with a state as a regular or dominant stockholder. There is no standard definition of a government-owned corporation (GOC) or state-owned enterprise (SOE), although the two terms are often used interchangeably. The defining characteristics are that they have a distinct legal shape and they are established to operate in commercial affairs. 

The role of the Chinese Communist Party (CCP) in SOEs has varied at different periods but has increased during the Xi Jinping administration, with the CCP formally taking a commanding role in all SOEs as of 2020. For example, Lai Xiaomin, the former president of state-owned China Huarong Asset Management announced in 2015 that during the operation of China Huarong Asset Management, the embedded CCP committee will play a central role, and party members will play an exemplary role. As Jin et al wrote in 2022,
CCP branches within China's SOEs are the governing bodies which make important decisions and inculcate its ideology.

Significance 
When China's SOEs were first created, they served as instruments for carrying out national goals and providing social stability via the iron rice bowl. Financial performance of SOEs was not a major concern until China's reform era.

, China has more SOEs than any other country, and the most SOEs among large national companies. In 2018, half of the country's centrally-owned SOEs were among the world's 500 largest companies. As of the end of 2019, China's SOEs represented 4.5% of the global economy and the total assets of all China's SOEs, including those operating in the financial sector, reached US$78.08trillion. 

State-owned enterprises accounted for over 60% of China's market capitalization in 2019 and generated 40% of China's GDP of US$15.97trillion (101.36 trillion yuan) in 2020, with domestic and foreign private businesses and investment accounting for the remaining 60%. Ninety-one (91) of these SOEs belong to the 2020 Fortune Global 500 companies.

SOEs have a primary role in China's energy sector. Its five large state-owned power generation companies are: Datang, Guodian, Huadian, Huaneng, and China Power Investment Corporation. Its state-owned grid companies are State Grid Corporation of China (SGCC) and China Southern Power Grid Corporation.

Most Chinese universities are SOEs. 

China's SOEs are at the forefront of global seaport construction, and most new ports built by them are part of the Belt and Road Initiative. State-owned banks are important sources of funding for port construction.

In addition to their own operations, SOEs invest in private enterprises. From the perspective of these private enterprises, this form of partial state ownership is helpful in obtaining financing from banks, particularly as prompts banks to require less collateral. Sometimes in investing in private enterprises, SOEs acquire enough shares to nationalize them. Over the period 2018-2020, 109 publicly traded enterprises with more than $100 billion in collective total assets were nationalized in this way. 

According to academic Wendy Leutert, China's SOEs, "...contribute to central and local governments revenues through dividends and taxes, support urban employment, keep key input prices low, channel capital towards targeted industries and technologies, support sub-national redistribution to poorer interior and western provinces, and aid the state's response to natural disasters, financial crises and social instability."

History of SOEs 
Following the CCP victory in the Chinese Civil War, one of the party's early steps was to nationalize enterprises that the defeated Nationalists had controlled. By 1952, China's SOEs accounted for more than 40% of industrial production, and by 1956 nearly all large-scale commerce and industry had been nationalized.

During the Third Front campaign to develop heavy industry in China's interior regions, almost 400 state-owned enterprises were re-located from coastal cities to secret sites in the Chinese interior where they would be more protected in event of foreign invasion.

In 1984, the State Council issued a directive to expand the autonomy of SOEs. SOEs were also allowed to sell surplus goods on the market once they had met their quotas.

With the goal of boosting innovation and efficiency, more than half of China's largest SOEs had established technical development centers by 1993. The same year, the CCP issued its "Decision on Issues Related to the Establishment of a Socialist Market Economy System." In the wave of reform thereafter, one goal was to separate SOE management from government and to empower a select group of SOEs with special property rights and autonomy.

Consistent with President Jiang Zemin and Premier Zhu Rongji's strategy of "grasping the large, letting go of the small," major SOE reform occurred in 1997, which represented a change from the previously incremental reform efforts. The state was encouraged to preserve large SOEs and to allow weaker ones to be "let go" through closing or consolidating. Other major policies that were part of the 1997 reforms included management and employee buyouts and the inclusion of foreign strategic partners.

SOE mergers have been routine since 2000. Beginning in 2003 with Hu Jintao's administration, the Chinese government increasingly funded SOE consolidation, supplying massive subsidies and favoring SOEs from a regulatory standpoint. These efforts helped SOEs to crowd out foreign and domestic private sector competitors.

As part of China's Great Western Development program, China's five large state-owned hydropower companies planned, underwrote, and built the majority of dams on the river and its tributaries. 

SOEs were major beneficiaries of China's stimulus program following the 2008 global financial crisis, which began a period where the private sector withdrew and the state-owned sector expanded.

Under Xi Jinping 
The pace of SOE mergers has increased under Xi. The goals of China's current SOE mergers include an effort to create larger and more competitive national champions with a bigger global market share by reducing price competition among SOEs abroad and increasing vertical integration.

Overall, China's focus on SOEs during the Xi era have demonstrated a commitment to using SOEs to serve non-market objectives and increasing CCP control of SOEs while taking some limited steps towards market liberalization, such as increasing mixed ownership of SOEs. Along with increased mergers, promotion of mixed ownership, and management of state capital have continued; results have been mixed. 

According to Xi, "[T]he dominant role of state ownership cannot be changed, and the leading role of the state-economy cannot be changed." In Xi Jinping Thought, the historical importance of state-owned enterprises is highlighted:

Xi Jinping thought also emphasizes the role of SOEs as part of the dominant position of state ownership necessary for common prosperity.

In 2023, several state-owned enterprises, including Shanghai Municipal Investment Group, established internal People’s Armed Forces departments run by the People's Liberation Army.

State Council (Central Government)

China Investment Corporation
 Central Huijin Investment
 China Jianyin Investment
 China Everbright Group

SASAC of the State Council 

, SASAC oversees 97 centrally owned companies. Companies directly supervised by SASAC have been reduced and consolidated through mergers according to the state-owned enterprise restructuring plan with the number of SASAC companies down from over 150 in 2008.

Ministry of Finance

Ministry of Education
Peking University
Founder Group (70%)
 Peking University Resources Group (30% by Founder Group, 40% by Peking University directly)
 Peking University Resources (Holdings) (65.96% collectively by Founder Group and PKU Resources Group)
 Founder Technology
 Founder Holdings
 Jade Bird Software (48%)
 Beida Jade Bird Universal Sci-Tech (24.05% collectively)
 Sinobioway Group (40% as minority shareholder)

Regional Governments
Governments below the national level operate portfolios of SOEs which operate both domestically and abroad.

Anhui Province
 Anhui Conch Cement
 Masteel Group (49%)

Beijing Municipality 
 Beijing Guoxiang Asset Management
 UBS Securities (33%)
 Beijing State-owned Capital Operation and Management Center
 Shougang
 Shougang Company
 Shougang Concord International
 CSC Financial (37.46%)

Chongqing Municipality 
 Chongqing Iron and Steel Company

Gansu Province
 Gansu SASAC
 Baiyin Nonferrous (36.16%)

Guangdong Province
 Guangdong Rising Asset Management 
 Zhongjin Lingnan (36.04%)
 Rising Nonferrous Metals Share
 Guangdong Hengjian Investment Holding (100%)
 Shaoguan Iron and Steel Group (49%)
 Guangdong Provincial Communication Group
 Guangdong Provincial Railway Construction Investment Group
 Guangdong Holdings
 Guangdong Investment (54.68%)
TCL Corporation (36%)
Tonly Electronics Holdings Limited (48.70%)

Shenzhen City
 Shenzhen Capital Group
 Shenzhen HTI Group

Zhuhai City
 Gree Group (100%)
 Gree Electric (sold in 2019)
 Gree Real Estate

Guangxi Zhuang Autonomous Region
 Guangxi Non-ferrous Metals

Guizhou Province
 Kweichow Moutai Group
 Kweichow Moutai

Hebei Province
 Hesteel Group
 Hesteel Company
 Hansteel
 Tangsteel

Heilongjiang Province
 Beiman Special Steel (41.37%)

Hubei Province

Wuhan City
 Wuhan Financial Holdings Group (100%)
 Founder BEA Trust (67.51%)

Liaoning Province
 Dongbei Special Steel
 Beiman Special Steel

Shanghai Municipality 
 Shanghai Data Exchange
 Shanghai Jiushi Group
 Shanghai Municipal Investment Group
 Shanghai International Port Group

Shandong Province
 Shandong Gaosu Group
 Shandong Energy Group

Linfen City
 Linfen Investment Group (100%)

Yantai City

 Yantai Guofeng (100%)
 Wanhua Industrial Group (39.497%)
 Wanhua Chemical Group (21.56%)

Shanxi Province
 Datong Coal Mining Group
 Datong Coal Industry
 Jincheng Anthracite Mining Group
 Shanxi Coking Coal Group
 Shanxi Coking Company
 Xishan Coal Electricity Group
 Xishan Coal and Electricity Power
 Taiyuan Coal Gasification Group (51%)

Tianjin Municipality 
 TEDA Holding
 Tianjin Pipe
 Tianjin TEDA F.C.
 Tianjin TEDA Co.

Xinjiang Uyghur Autonomous Region
 Xinjiang Investment Development Group (100%)
 Xinjiang Ba Yi Iron and Steel Group (15%)

Zhejiang Province

Ningbo City
 Bank of Ningbo (21.38%)

Hong Kong S.A.R.
 Hong Kong Link (100%)
 MTR Corporation (around 75% shares)
 Kowloon–Canton Railway Corporation (100%)

See also

 List of government-owned companies
 State ownership

References

 
Lists of companies of China
China
China