The Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Promoting Chinese-style Modernization, adopted at the Third Plenary Session of the 20th Central Committee of the Communist Party of China, closely focuses on promoting Chinese-style modernization and further deepening reform, stresses the need to promote the optimization of the layout and structural adjustment of the state-owned economy, and clarifies the key investment areas and directions of state-owned capital. Promote the concentration of state-owned capital in important industries and key areas related to national security and the lifeline of the national economy, in public services, emergency response capabilities, and public welfare fields related to the national economy and people's livelihood, and in forward-looking strategic emerging industries. As an important material and political foundation for the development of the cause of the Party and the country, state-owned enterprises are the main force and vanguard in the construction of a modern industrial system. Promoting the optimization of the layout and structural adjustment of the state-owned economy is an intrinsic requirement for making the state-owned capital and state-owned enterprises stronger, better, and larger, and is also an important way to enhance the overall functional role of the state-owned economy.
The status quo of the "three concentrations" of state-owned capital
1. Review of the optimization and adjustment of the layout of the state-owned economy. Concentrated agglomeration, as the main theme of deepening reform, runs through the whole process of structural adjustment of the layout of state-owned capital. Before reform and opening up, in the mainland's ownership structure, the economy owned by the whole people and the economy under collective ownership had an absolute advantage. In 1978, the proportion of the public economy in the country's total industrial output reached 100 percent. As an important means of government regulation and control, the mainland has chosen the path of giving priority to the development of heavy industry, and has made arrangements around the two themes of heavy industry and combat readiness and security. After the reform and opening up, the distribution scope of the state-owned economy has shrunk and withdrawn in the fields of food manufacturing and textiles, and "grasping the big and letting go of the small" and "advancing and retreating" have become the main directions of the layout structure. Through the restructuring of the layout of the state-owned economy, the pattern of "small and scattered" state-owned enterprises has been fundamentally changed, and state-owned assets have gradually been concentrated in important industries and key areas that have a bearing on national security and the lifeline of the national economy.
In 1997, the 15th National Congress of the Communist Party of China (CPC) for the first time put forward the reform goal of strategically adjusting the layout of the state-owned economy, emphasizing that "it is necessary to strategically adjust the layout of the state-owned economy, strengthen the key points and improve the overall quality of state-owned assets through asset reorganization and structural adjustment." In 1999, the Fourth Plenary Session of the 15 th CPC Central Committee adopted the "Decision on Several Major Issues Concerning the Reform and Development of State-Owned Enterprises," which put forward the idea of "strategically adjusting the layout of the state-owned economy and reorganizing state-owned enterprises," implementing the reform proposition of "advancing and retreating," and clearly focused on "three major industries and two types of enterprises," that is, "industries involving national security, industries with natural monopolies, industries that provide important public goods and services to society, and important backbone enterprises in pillar industries and high-tech industries."
Since then, from the issuance of the "Notice on Promoting the Adjustment of State-owned Capital and the Restructuring of State-owned Enterprises" in 2006, to the "Guiding Opinions on Deepening the Reform of State-owned Enterprises" in 2015, which put forward the concept of classification of state-owned enterprises for the first time, and then to the "three concentrations" of state-owned capital proposed at the third meeting of the Central Committee for Comprehensively Deepening Reform in 2023, the development ideas of strategic adjustment of the layout of the state-owned economy to enhance core functions and enhance core competitiveness have been continuously emphasized.
2. The overall characteristics of the layout of state-owned capital in the mainland. The growth trend of state-owned capital on the mainland is remarkable. Since 2014, the state-owned capital (excluding financial institutions) of the whole society has increased from 102.1 trillion yuan to 339.5 trillion yuan in 2022, an increase of 2.33 times. According to the compound growth rate, the compound annual growth rate of total state-owned capital from 2014 to 2022 is 14.28%. The revenue of the state-owned capital operating budget increased from 202.3 billion yuan in 2014 to 674.4 billion yuan in 2023, an increase of 2.33 times, with a compound annual growth rate of 12.8%. It can be seen that the growth trend of state-owned capital on the mainland is remarkable, and the total amount has increased substantially, and it continues to play a supporting role in the national economy.
Remarkable results have been achieved in the strategic reorganization and professional integration of the state-owned economy. Since the 18th National Congress of the Communist Party of China, 28 groups of 50 enterprises have been reorganized and integrated in a market-oriented manner, and 15 central enterprises have been newly established and received. Since 2024, the restructuring and integration of central enterprises has accelerated significantly, and the number of restructuring and integration events has increased by 120% year-on-year. In the fields of shipbuilding, steel, energy, construction, water transportation, equipment manufacturing, etc., a number of highly competitive industry leaders have been created, and important results have been achieved in the integration of resources in the fields of rare earth, logistics, communication towers, oil and gas pipeline networks, electrical equipment, etc., and the number of central enterprises has been adjusted from 117 in 2012 to 97 in 2023, and the operating income in the fields of national security, the lifeline of the national economy and the national economy and people's livelihood accounts for more than 70% of the total. In 2022, the proportion of investment in the main business of central enterprises and the number of subsidiaries engaged in the main business will both exceed 90%, the number of legal persons of central enterprises will be reduced by 44%, and the management level will generally be controlled within level 4 (inclusive). Strip the auxiliary industry, highlight the main business, increase the industrial concentration, and effectively improve the homogeneous competition in the industry.
The state-owned capital of the mainland is widely distributed in industries, and is mainly concentrated in important industries and key areas related to national security, the lifeline of the national economy, and scientific and technological R&D and innovation. Taking the central enterprises as an example to analyze the distribution of industries, according to the current standard of the "National Economic Industry Classification", there are 15 areas of the existing national economic industry, and 97 central enterprises are distributed in 12 fields, including scientific research and technical services, manufacturing, construction, electric and heat supply and other industries. Among them, the number of manufacturing enterprises, including aerospace science and industry, China shipbuilding, weapons industry, Sinopec, Anshan Iron and Steel, etc., reached 27, accounting for 27.8%. There are 16 enterprises in scientific research and technical services, accounting for 16.5%, including large central enterprise groups such as Aerospace Science and Technology, China Star Network, China First Heavy Industries, and China South-to-North Water Diversion. The important industries and key areas related to national security and the lifeline of the national economy are as follows: The lifeline industries include nine industries: military industry, national defense science and technology, power grid, petroleum and petrochemical, telecommunications, coal, civil aviation, shipping, finance, and culture. The key areas include nine fields: major equipment manufacturing, automobiles, electronic information, construction, iron and steel, non-ferrous metals, chemical industry, survey and design, and science and technology. State-owned enterprises are mostly concentrated in this sector, and data shows that central enterprises provide nearly 100% of the country's basic telecommunications services, 96% of the power grid coverage, 67% of the oil refining capacity, 54% of the installed power capacity, and 25% of the coal production. The public services, emergency response capabilities, and public welfare fields related to the national economy and people's livelihood mainly include medical and health care, health care for the elderly, disaster prevention and mitigation, emergency support and other industries. According to the 2022 China Fiscal Yearbook, investment expenditure on public welfare facilities accounted for 3.5% of the total capital injection of state-owned enterprises in 2022. Forward-looking strategic emerging industries include next-generation information technology, biotechnology, new materials, green and low-carbon industries. In 2023, central enterprises will complete effective investment of 2.18 trillion yuan in strategic emerging industries, a year-on-year increase of 32.1%. The investment in scientific and technological research and development was 903.96 billion yuan, an increase of about 70 billion yuan year-on-year, and the intensity of R&D investment was 2.53%, an increase of 0.17% year-on-year.
The optimization of the layout of local state-owned capital has been promoted in depth. As of the end of November 2023, the operating income of local supervised enterprises was 35.6 trillion yuan, a year-on-year increase of 5.9%, the total profit was 1.6 trillion yuan, a year-on-year increase of 6.4%, the added value was 6.5 trillion yuan, a year-on-year increase of 3.5%, the investment in fixed assets was 4.9 trillion yuan, a year-on-year increase of 4.5%, and the R&D investment was more than 480 billion yuan, a year-on-year increase of 16.7%. According to statistics, by the end of 2019, more than 150 state-owned capital investment and operation companies had been reorganized and established at the provincial level, accounting for about 1/5 of the number of provincial enterprises in the SASAC system. Nearly half of the provinces and autonomous regions in the country have issued pilot implementation plans for state-owned capital investment and operation companies. Since 2021, Heilongjiang, Sichuan, Anhui, Inner Mongolia, Hebei, Gansu and other provinces and cities have successively issued plans and policy measures to promote the optimization of state-owned capital layout and structural adjustment during the 14th Five-Year Plan, clarifying the goals and key tasks and measures for optimizing the layout of state-owned capital and structural adjustment at the end of the 14th Five-Year Plan.
In the context of the "three concentrations" of state-owned capital
The main problems faced by the layout of state-owned capital
First, the structural contradictions in the distribution of state-owned capital still exist. Taking the data of central enterprises as an example, it can be seen that the layout of state-owned enterprises is still dominated by traditional heavy industries, and there is homogeneous competition and disorderly competition in some industries. Moreover, the distribution range is wide, the industry is scattered, and the phenomenon of "large and complete, small and complete" is still prominent, resulting in the lack of core competitiveness of state-owned capital. Compared with the world's first-class enterprises, there are still problems and shortcomings of large but not strong, complete but not excellent, scattered but not refined.
Second, the distribution of state-owned capital investment is uneven. According to the data of the 2022 China Fiscal Yearbook, in terms of state-owned capital expenditure, calculated according to the three areas of concentration, the expenditure related to national security and the lifeline of the national economy accounted for 25.4%, the direct expenditure related to the national economy and people's livelihood accounted for 5%, and the expenditure related to forward-looking emerging industries accounted for 14.3%. In 2023, the total investment of central enterprises will be 6.2 trillion yuan, a year-on-year increase of 6.9%, of which the new industry will account for only 35.25%.
Third, regional development is uneven and inadequate. Affected by factors such as national strategic orientation, economic development level, and population density, the state-owned capital of the mainland is mainly concentrated in the eastern region and large representative cities. Taking central enterprises as an example, according to the statistics of the location of their headquarters, among the 97 central enterprises under the supervision of the State-owned Assets Supervision and Administration Commission, the Beijing-Tianjin-Hebei region is the main agglomeration, with a total of 73, accounting for 75.3%, ranking first; There are 9 in the Guangdong-Hong Kong-Macao Greater Bay Area, including 3 in Shenzhen, 3 in Hong Kong, 2 in Guangzhou and 1 in Macao, ranking second. The Yangtze River Delta region is concentrated in Shanghai, with a total of 6, ranking third; There are 4 in the three northeastern provinces, 4 in the central region and 1 in the southwest region.
Fourth, the overall planning of the layout of local state-owned capital is insufficient. Provinces have not achieved balanced development in the implementation of state-owned capital reform, the local supervision and evaluation system is not perfect, and there is a certain gap between some local SASAC and local state-owned enterprises in promoting reform. The endogenous power of reform is insufficient, the pursuit of economic benefits is excessive, and the functional positioning of itself is neglected, and there are problems of not daring to change, unwilling to change, and will not change.
Promote the practice path of "three concentrations" of state-owned capital
1. Always adhere to and strengthen the party's overall leadership over the reform of state-owned assets and state-owned enterprises. The Third Plenary Session of the 20th Central Committee of the Communist Party of China emphasized that "the leadership of the Party is the fundamental guarantee for further deepening reform in an all-round way and promoting Chinese-style modernization". In the great process of coordinating and promoting the strategic layout of the "three concentrations", it is necessary to adhere to the "two consistent", firmly safeguard the authority of the Party Central Committee and centralized and unified leadership, and give play to the party's role as the core of leadership in controlling the overall situation and coordinating all parties. Adhere to the party's leadership throughout all aspects and the whole process of reform, promote the deep integration of party building and enterprise production and operation, integrate the party's leadership into corporate governance, and ensure that the reform of state-owned assets and state-owned enterprises always moves in the right direction.
2. Adhere to the two-wheel drive at both ends, and promote the optimization of the layout of the state-owned economy with the reform of industrial classification. For traditional industries related to national security, the lifeline of the national economy and the national economy and people's livelihood, such as public services, emergency response capabilities and public welfare, the first is to further integrate homogeneous enterprises in key areas through mergers and acquisitions, strategic cooperation, etc., so as to solve problems such as industrial overlap, duplicate allocation and disorderly competition, and enhance the competitiveness and influence of key links in the industrial chain; The second is to improve product quality and added value through technological transformation, digital empowerment, equipment upgrading, etc., cultivate new growth points, and promote the transformation of traditional industries to strengthen the foundation. For forward-looking strategic emerging industries, the first is to appropriately expand the scale of the state-owned capital budget, increase investment in scientific and technological innovation, play a leading role in innovation, and accelerate the development of new quality productive forces; The second is to strengthen the integration of production, education and research, guide universities and leading enterprises to integrate innovation resources, optimize the layout of platforms, and promote original innovation to achieve greater breakthroughs.
3. Promote the coordinated development of the state-owned economy and the private economy as a whole. In the report of the 20th National Congress of the Communist Party of China, General Secretary Xi Jinping once again emphasized that it is necessary to unswervingly consolidate and develop the public economy, and unswervingly encourage, support and guide the development of the non-public economy. Optimizing the layout of the state-owned economy is of great significance for the coordinated development of the state-owned economy and the private economy. The existing layout of the state-owned economy is relatively wide, and the excessive layout of the state-owned economy in industries outside the strategic basic key areas is not conducive to the survival and healthy development of the private economy and the decisive role of the market in the allocation of resources. With regard to the areas involved in the "three concentrations," we should focus on the layout of the state-owned economy in order to ensure the control of the state-owned economy in strategic and basic areas. With regard to competitive fields, it is necessary to persist in market-oriented reforms and stimulate the vitality of the private economy and the state-owned economy market with the principle of openness and transparency. Through the use of state-owned capital to invest in private enterprises or the introduction of private capital in state-owned enterprises, the two-way integration of the strength of the state-owned economy and the vitality of the private economy can be realized, so that the state-owned economy and the non-public economy can support each other to a certain extent, and build a comprehensive and in-depth modern industrial system, which will help improve the overall efficiency of the state-owned economy, promote industrial agglomeration, transformation and upgrading, and promote China's economy to achieve a higher level of development.
Fourth, optimize the regional layout of state-owned capital and promote regional coordinated development. In the report of the 20th National Congress of the Communist Party of China, General Secretary Xi Jinping pointed out that it is necessary to promote the development of the western region to form a new pattern, promote the comprehensive revitalization of the northeast to make new breakthroughs, promote the rise of the central region, and encourage the eastern region to accelerate modernization. Promote the coordinated development of Beijing-Tianjin-Hebei, the development of the Yangtze River Economic Belt, and the integrated development of the Yangtze River Delta, and promote the ecological protection and high-quality development of the Yellow River Basin. High-standard and high-quality construction of Xiong'an New Area, and promote the construction of the Chengdu-Chongqing Economic Circle. The implementation of the strategy of coordinated regional development is a major policy decision made by the CPC Central Committee and an important strategic measure related to the overall economic development of the mainland. Under the guidance of the national strategic layout, combined with the economic development level, population density, resource endowment, development foundation and other factors of each province, the state-owned capital layout of the eastern, central and key cities is taken as the starting point to drive the radiation of the surrounding areas, focus on supporting the development of the central and western regions, help the industrial upgrading and transformation of the eastern coastal areas, and form a regional layout of coordinated development.
5. Improve the local state-owned assets system to ensure that local SASAC and state-owned enterprises efficiently implement the central government's decision-making and deployment. The local SASAC should further improve its political position, enhance its sense of responsibility, fully realize the importance and urgency of strengthening the optimal layout of local state-owned capital, supervise and guide local state-owned enterprises to clarify their own functional positioning, strictly implement the main responsibility, and focus on the main business. The local SASAC should strengthen the construction of the local state-owned capital layout policy system, and pay attention to the particularity of their own provinces in terms of economic development level, industrial advantages, population structure, resource endowment and other aspects while realizing the effective convergence with the central policy requirements. Pay attention to the establishment and improvement of the supervision and assessment system, formulate the annual guidance and supervision plan of each province for local state-owned assets, and enhance the value creativity of state-owned assets and state-owned enterprises with the goal of high-quality development. Improve the performance appraisal system, change the profit appraisal orientation, incorporate social responsibility, social benefits, technological innovation and other indicators into the appraisal system, and increase the weight of indicators.
Promoting the "three concentrations" of state-owned capital is an inevitable requirement for the in-depth development of reform, and continuing to promote the optimization of the layout and structural adjustment of the state-owned economy, and promoting the rational flow and optimal allocation of state-owned capital, can ensure the effective improvement of the quality and quantity of the state-owned economy, and provide strong support and important guarantee for the deepening and upgrading of the reform of state-owned enterprises, the construction of a modern industrial system and high-quality development.
Group members: Shaohong Wang, Chunyu Li, Qi Wu, Wentao Wang, Boyu Yang
Source: Modern State-owned Enterprise Research