By Ma Jun & Jia Tao, Research Team on "Prominent Conflicts in Deepening SOE Reform and Countermeasures", Enterprise Research Institute of DRC

Research Report No 111, 2015 (Total NO 4796)

Abstract:

Board building of state-owned enterprises under direct administration of government is the focus in corporate governance reform, pinpointing the root cause for "the old system" restricting "the new system" as well as the difficulty facing corporate governance reform, marking the interface between government and enterprise. The State-owned Assets Supervision and Administration Commission of the State Council has launched and improved the trial project on board of solely state-owned enterprises for a decade, which progresses faster in organizational building, laying a sound foundation for follow-up reform, but comparatively lags behind in institutional building, dragging down the improvement of SOE corporate governance. The board’s organizational and institutional building complement each other, the former creating conditions for the latter while the latter helping improve the former. It is suggested that future reform should focus on strengthening institutional building by following the approach of "power devolution, a clearly defined responsibility and the integration of power and responsibility" and efforts should be made to coordinate the simultaneous advance of organizational and institutional building. Specific measures include allowing the board to fully exercise its powers, improving the accountability and exemption of responsibility mechanism for the board of directors, enhancing the policy-making mechanism for major issues, and further intensifying organizational building.