Reform and restructuring should be accelerated in SOEs engaged in the downstream petrochemical sector and in value-added telecom services, to allow injection of private or foreign capital, Li said.

Central SOEs should also become heavyweights in sectors including machinery, automobiles, IT, construction, iron and steel, and non-ferrous metals, he added.

Li said the government will strive to enhance the "vitality and competitiveness" of State firms by diversifying their ownership through share-holding reform, strategic investors, restructuring or listing.

In the next few years, the number of central SOEs would be whittled to 80-100 from the current 161 through mergers, and all struggling SOEs would exit the market by 2008, Li said.

The 161 enterprises under SASAC raked in sales of 3.7 trillion yuan (US$473.8 billion) in the first half of the year, a year-on-year increase of 20.6 per cent. Of them, at least 40 are engaged in the seven key sectors listed yesterday and their total assets represent three quarters of all central SOEs.

Li Zhaoxi, deputy chief of the Enterprise Research Institute affiliated to the State Council Development Research Centre, yesterday said that by explicitly publishing the "key sectors," State capital can be channelled to priority industries and retreat from non-essential areas.

This will facilitate the opening of those areas and speed up the reform of SOEs, he said.

Shao Ning, vice-chairman of SASAC, said that compared with other State firms, reforms of central SOEs have been relatively slow; and will be accelerated through regrouping and structural readjustment.

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