World Economy

China’s Xi Wants SOE Reforms

China’s Xi Wants SOE ReformsChina’s Xi Wants SOE Reforms

China’s state-owned enterprises are the backbone of the economy and the government must “avoid the blindness of the market” even as it pursues reform, President Xi Jinping said in remarks published in state media.

The government must have confidence in the state-owned enterprise system, Xi said on a trip to the northeastern province of Jilin, adding that reform also meant following the rules of the market economy to enable SOEs to become more competitive and contend with risk, Xinhua said quoting Xi who was on a trip to the northeastern province of Jilin, where he met workers.

The government is working to boost the competitiveness of SOEs, whose inefficiency is one of the country’s thorniest quandaries.

A number of SOEs have embarked on reforms by diversifying ownership to include more non-state investors, seen as helping combat official corruption, as well as pushing mergers and restructuring.

Corruption inspectors have turned their attention this year to government-owned industries, which has long been plagued by underperformance despite reform efforts by the leadership.

Foreign direct investment in China will rebound in 2015 on the back of a robust expansion in the first six months, Vice Commerce Minister Wang Shouwen said on Friday.

Wang expected the FDI in China for the whole 2015 to grow around 4% to $125 billion, compared with a 1.7% expansion recorded in 2014.

Official data showed on Friday that the FDI rose 8% in the first half of the year to $68.4 billion, accelerating sharply from 2.2% in the same period last year.

Wang attributed the improvement to China’s continued efforts in widening pilot reforms in free trade areas, fewer government restrictions and active promotion of opening up in certain industries and inland areas.

However, he warned that FDI growth will probably drop in the latter half mainly due to a slow economic recovery in major FDI sources and the tapering of US quantitative easing.