China picks six state-owned companies for reform trials

BEIJING, July 15 (UPI) -- China picked six state-owned companies Tuesday that will undergo reform trials, giving these companies more control over executive hiring and independent functioning.

The State-owned Assets Supervisory and Administrative Commission selected State Development & Investment Corp. and COFCO Corp. for a switch to state capital management that will have the government use its regulatory authority to primarily supervise how efficiently capital is used.

China National Building Materials Group Corp. and China National Pharmaceutical Group Corp. will experiment with mixed ownership and board-led hiring of top management that will allow the board of directors to hire, evaluate and pay top executives.

China Energy Conservation and Environmental Protection Group and Xinxing Cathay International Group will also be used to try out a board-led human resources management.

The regulator hasn't imposed any limits on the experiment and said they will include more companies at an appropriate time.

Chinese regulators have been criticized heavily for interfering in the working of state-owned companies, many times causing these companies to have stagnant growth. This reform plan was outlined last year at the Communist Party's annual meeting of members.

Wen Zongyu, director of the state-owned economy bureau at the Ministry of Finance's Institute of Fiscal Science, said the move towards reform was welcomed, saying that it could boost efficiency in these companies. But he did say the reforms failed to include any major state-dominated sectors, such as oil, telecommunications, power and aviation.