Summary of Key Points
A new round of state-owned assets and enterprises (SOE) reform (2026–2029) has been fully launched, with the core objective of making SOEs more effective in serving national interests. This involves focusing on critical areas such as national security and the lifeline of the national economy. The reform aims to strengthen and optimize state-owned capital by improving its layout, enhancing value creation, and implementing thorough supervision, thereby better fulfilling its role in driving technological innovation, controlling industries, and providing security support. The meeting has set both the direction and the methods for the reform, unifying the national standards and aligning with the long-term development goals of the country.
Detailed Analysis
1. Reform Core: SOEs as the "Ballast Stone of National Strategy"
The most emphasized aspect of this reform is the strategic role of SOEs. In simple terms, SOEs are not ordinary businesses; they must be capable of stepping in at critical moments—such as achieving breakthroughs in bottleneck technologies (like semiconductors and advanced equipment), responding to external risks (e.g., energy security), and ensuring public welfare (e.g., public transportation and emergency supplies). Researcher Zhou Lisha noted that most SOEs operate in industries vital to the nation's wellbeing, making them key players in risk management. The new reform requires SOEs to focus more on their functional roles: not just on expanding scale but also on innovation (research and development), industry control (managing critical supply chains), and security support (ensuring supply and resilience). For example, state-owned capital has already invested heavily in renewable energy and new materials, and these efforts will be intensified in the future.
2. Layout Optimization: State-Owned Capital to Be Concentrated in Three Areas
There was a issue of SOEs being overly spread out across various industries—some sectors were unprofitable yet consumed resources, while others (such as high-end technology) lacked investment. The new reform aims to concentrate state-owned capital in three key areas:
- Industries related to national security and vital infrastructure (e.g., defense, energy, food);
- Public services that impact people's lives (e.g., public transportation, healthcare, emergency supplies);
- Emerging industries (e.g., artificial intelligence, green hydrogen, low-altitude economy).
The State-owned Assets Supervision and Administration Commission (SASAC) aims for more than 88% of the revenue of central enterprises to come from these 20 key sectors, addressing the challenges of a long front line and insufficient investment in high-end areas. Local governments are also taking action: Shanghai is investing in emerging industries, Hainan is developing distinctive industries in conjunction with its free trade port, and Shanxi is transitioning to renewable energy and hydrogen energy.
3. Change in Evaluation Criteria: From "Scale" to "Value," Moving Away from Extensive Expansion
In the past, the evaluation of SOEs focused more on revenue and size. Now, the focus shifts to value creation. The new criteria include:
- Categorized Evaluation: Different types of SOEs are assessed based on different indicators (e.g., public welfare companies are evaluated on service quality, technology companies on R&D investment);
- Five Value Drivers: Added value generated, functional value (contribution to national strategy), economic added value (real versus nominal profits), proportion of investments in emerging industries, and brand value (influence);
- Market-oriented Mechanisms: Management can be promoted or removed based on performance, and employee compensation can be adjusted. Long-term incentives (such as equity) are provided for researchers to encourage innovation.
In other words, the goal is for SOEs to shift from expanding their presence to improving their efficiency and effectiveness.
4. Enhanced Supervision: Thorough Supervision, Covering Every Project
Previously, some SOEs had multiple layers of subsidiaries, which could lead to ineffective governance at the grassroots level. The new reform introduces "thorough supervision"—like an X-ray, allowing oversight from the group headquarters all the way to the smallest projects. This will be achieved through digital tools that integrate data from all subsidiaries to monitor funds, investments, and compensation in real time, providing early warnings of potential risks. For example, SASAC requires central enterprises to adopt financial digitalization to improve supervision accuracy.
The goal is to balance giving SOEs autonomy for innovation with preventing the loss of state assets, ensuring that resources are used efficiently.
5. Implementation Path: From Top to Bottom, a Clear Plan in Place
This reform is not just empty rhetoric; there is a detailed plan in place (the "2026–2029 Deepening State-Owned Assets and Enterprises Reform Plan" was released in May). The meeting has outlined a comprehensive approach, from optimizing the layout to improving evaluation mechanisms, from market-oriented reforms to enhanced supervision, including strengthening party building. Local governments are adapting these measures to their specific circumstances: Shanxi, as a major energy province, is focusing on renewable energy and low-altitude economy; Hainan is developing distinctive industries within its free trade port framework.
The new reform represents a coordinated effort from the central government to local authorities and enterprises, ensuring that the reforms are effectively implemented.
In One Sentence
The new round of SOE reform aims to make these enterprises more focused on their core businesses, value creation, and supervision, thereby becoming a vital support for national development. The changes that ordinary people will likely notice include faster technological advancements in critical areas, more stable public services, and improved efficiency of state-owned enterprises.