China plans to complete more than 70 percent of the tasks of its three-year (2020-22) action plan by the end of this year, further pushing forward the mixed-ownership reform and reorganization process in its State-owned enterprises, a senior government official said.

The government will improve the market-oriented operational mechanism and promote contractual management systems for executives at all levels of SOEs this year, said Peng Huagang, secretary-general of the State-owned Assets Supervision and Administration Commission of the State Council.

SASAC will support the corporate giants to actively and orderly offer the incentive to core talent in key positions, as well as explore ways of providing medium and long-term incentives for their employees with outstanding performance, said the official.

China's Central Committee for Deepening Overall Reform had reviewed and approved the three-year (2020-22) action plan for SOEs in late June. It called for renewed efforts to optimize the structure of the State-owned economy to make it more competitive, innovative, influential and more able to withstand risks.

He stressed that works related to State-owned assets and SOEs during the 14th Five-Year Plan (2021-25) period should be conducted against the backdrop of the country's new growth paradigm.

China unveiled a move last year to pursue the new development paradigm of dual-circulation, which allows the domestic and overseas markets to reinforce each other, with the domestic market as the mainstay.

Despite the COVID-19 pandemic effect, net profits of China's 97 centrally-administered State-owned enterprises grew by 2.1 percent on a yearly basis to 1.4 trillion yuan ($215.74 billion) in 2020, while nearly 80 percent of the central SOEs saw net profit growth on a yearly basis, according to the latest data released by the SASAC.

Central SOEs gained 176 billion yuan in net profit in December, the highest for that period in history. Their monthly net profits have maintained double-digit growth for six consecutive months since the second half of last year.

The country's top State assets regulator said that due to the pandemic, the total operating revenue of central SOEs fell by 2.2 percent on a yearly basis to 30.3 trillion yuan in 2020.

Aside from cutting SOEs' administrative functions and overcapacity in certain industries, China launched a 200-billion-yuan fund in Shanghai late last month to facilitate mixed-ownership reform and cutting-edge technology innovation at its SOEs.

The fund will support the reform projects by setting up sub-funds, joint investments and other investment avenues to facilitate the three-year action plan for SOE reforms.

As a major force in participating in the development of Belt and Road Initiative-related projects, China's SOEs have overcome difficulties, with not a single project under the initiative having shut down production, Peng said. They have to date been involved in 3,400 BRI projects, with more than 600 completed already.

China Railway Group Ltd, known as CREC, reported that its annual output value amounted to $361.62 million for the construction work of the Jakarta-Bandung high-speed railway in Indonesia last year. Despite the epidemic, the work schedule was not disrupted, and the company has helped create more than 5,000 jobs for locals.

Supported by reforms, the improved efficiency of the SOEs will benefit the whole corporate sector as they provide broad opportunities for the investment and growth of businesses with varied ownership, as well as reinforce deep integration of industrial and supply chains for companies of different sizes in domestic and global markets, said Chen Yun, CREC's chairman.

During the 13th Five-Year Plan period (2016-20), SOEs have competently coped with complex and grim situations while their economic efficiency steadily improved, with annualized operating revenue, net profit and labor productivity up 5.6 percent, 8.9 percent and 7.8 percent, respectively during the period, according to SASAC.

The SOEs have kept advancing supply-side structural reforms and other market-oriented reforms over the past five years, which have led to a marked improvement in the innovation capacity, competitiveness and capability of resisting risks in the State-owned economy, said Zhou Lisha, a researcher with the research institute of SASAC.

China will push corporate reforms at 8,000 State-controlled enterprises during the country's 14th Five-Year Plan (2021-25) period to further optimize asset structures and improve market-oriented operating mechanisms, said the country's top State asset regulator.

Total assets associated with these reforms are worth 1.3 trillion yuan ($198.12 billion). The campaign is conducive in fundamentally solving outstanding issues among State-owned businesses and helps the country pursue high-quality growth over the long run, said Weng Jieming, vice-chairman of the State-owned Assets Supervision and Administration Commission of the State Council.

Unlike centrally administrated State-owned enterprises, which are large groups within the jurisdiction of the central authorities, State-controlled firms refer to all enterprises owned partly or outright by all levels of government across the country.

"Even though reforms will involve a large number of companies, and some are also facing historical debt and other operational issues, the government will clarify approval procedures, asset evaluations, tax payments and land disposals for their corporate reforms in the next stage," Weng said.

He added that all corporate reforms among centrally administered SOEs along with 96 percent of the country's State-controlled enterprises supervised by provincial-level State-asset regulators to date have been completed.

Since central SOEs completed their corporate system reforms, their scale, earning strength and operational efficiency have all significantly improved in recent years, said Liu Xingguo, a researcher at the Beijing-based China Enterprise Confederation.

Total assets of China's central SOEs amounted to 63.4 trillion yuan by the end of 2019, growing 16.12 percent from 2017, while their net profits reached 1.4 trillion yuan, an increase of 32.32 percent over 2017, government data showed.

Under new government policies announced in October, major SOEs will be encouraged to sell significant stakes to outside strategic partners during a three-year action plan for SOE reform, which will run through 2022.

The plan is designed to implement measures outlined by the 19th National Congress of the Communist Party of China in late 2017 to push SOEs to adapt to market-oriented and law-based rules and norms in the new era as soon as possible and assume greater responsibility in an open and innovative environment.

The government encourages publicly listed SOEs to introduce strategic investors by offering them 5 percent or more equity to participate in corporate governance as active shareholders.

China Southern Airlines General Aviation Ltd, a unit of China Southern Airlines, has taken a mixed-ownership reform path after the parent firm brought in three new investors.

Following the move, the registered capital of China Southern Airlines General Aviation Ltd will grow from 1 billion yuan to more than 1.34 billion yuan. The company currently operates 25 general-purpose aircraft, including 16 S-series heavy helicopters, the airline said in a statement.

Despite the new investors, Shanghai-listed China Southern Airlines is still the largest shareholder in the company with a 57.9 percent stake. SOE Reform Development Fund Management Co Ltd holds 14.1 percent, China Southern Power Grid Industrial Investment Group Co Ltd 10 percent, China Southern Airlines Capital 10 percent and a Zhuhai-based company 8 percent.

Pang Xiaogang, vice-president of State Grid Corporation of China, said that mixed-ownership reform has been actively and steadily carried out over the past several years, and the role of State-owned capital has been further diversified.

Since 2013, China has completed mixed-ownership reform at more than 4,000 firms, with more than 1.5 trillion yuan of non-State capital involved, the SASAC said.

China's SOEs saw their aggregate net profit after taxes rise 62.7 percent on a yearly basis in October, while operating revenue climbed 7 percent, the Ministry of Finance said.

SOEs reported 49.68 trillion yuan in revenue between January and October, growing 0.2 percent over the same period of last year, while net profit totaled 1.93 trillion yuan after taxes, down 11.4 percent year-on-year, the ministry said.

China will continue to steadfastly implement the 2020-22 action plan for the reform of State-owned enterprises and pave the way for more productive collaborations between SOEs and private companies in 2021, the country's top State asset regulator said.

The country's 14th Five-Year Plan will start in 2021. SOEs will focus on their main responsibility and business, develop sound market-oriented operating mechanisms and increase core competitiveness next year, said Hao Peng, chairman of the State-owned Assets Supervision and Administration Commission of the State Council.

The three-year action plan for SOE reform is part of the central authorities' efforts to boost productivity and make corporate giants more marketized, Hao said.

The country will also encourage more SOEs to collaborate with private companies to increase China's economic growth momentum, he said at the commission's meeting in Beijing.

To ensure all these works are conducted smoothly, the task of relieving SOEs of their obligation to undertake social programs has been completed this year.

Greater efforts will be made in fostering mixed ownership of businesses hitherto owned by SOEs, thus strengthening the modern corporate structure.

SOEs need to make continual efforts to achieve higher quality and efficiency, sharpen core competitiveness and strengthen dynamism for sustained growth, in order to play their role in underpinning the national economy better, he said.

The government will continue to unswervingly consolidate and develop the public sector, and encourage, support and guide the private sector, said Hao, adding that SOE reform needs to achieve higher quality and efficiency, help facilitate deeper cooperation in the industrial and supply chains and enhance SOEs' core competitiveness.

Under new government policies, market access will continue to be broadened for private companies. Power grid operators will accelerate the process of spinning off competitive operations such as equipment manufacturing. Oil and gas infrastructure will be made equally accessible to all businesses regardless of types of ownership.

Private companies will be supported to participate in the construction of major railway projects and have more access to key national research infrastructure, especially those managed by SOEs. Accreditation of national-level technology centers in private companies will be accelerated.

"SOEs will be supported in enhancing basic research and innovation, advancing research in critical technologies and vigorously promoting entrepreneurship and innovation over the next five years," said Peng Huagang, secretary-general of the SASAC.

By enabling SOEs to divest some of their non-core business units, they will be encouraged to sharpen their focus on growing their main business, Peng said. The government will continue to encourage SOEs to build more key infrastructure and manufacturing projects in the country and partner economies involving in the development of the Belt and Road Initiative over the next five years.

A shining example of that strategy comes from China Railway Group Ltd, known as CREC, which announced that it has completed all the main construction work at Xiong'an Railway Station, the rail traffic hub of the Xiong'an New Area－China's new landmark economic zone.

As an essential part of a city, the intelligence of buildings and infrastructure facilities is key to developing future smart cities. Smart technologies have been adopted in the station for information sharing and unified management, said Wu Yadong, chief engineer for the Xiong'an station project from China Railway Construction Engineering Group, an arm of CREC.

"Architectural concrete requires a high proficiency of construction to ensure the effectiveness of the building. The project model has been constructed dozens of times so that the waiting room in the station can be built as a whole with beauty and aesthetic value," he said.

Another SOE involved in building key infrastructure is CCCC Tianhe Mechanical Equipment Manufacturing Co, a unit of Beijing-based China Communications Construction Co Ltd. The SOE reported that it had excavated more than 200 meters of tunnels via using its self-developed tunnel-boring machine, or TBM, in the construction of a 22-kilometer-long expressway tunnel, the longest of its kind in China, at Shengli Tunnel project in the Tianshan Mountain area in the Xinjiang Uygur autonomous region.

Shengli Tunnel is part of a freeway linking the regional capital Urumqi with Yuli county. The construction of the six-year project is expected to complete in 2025.

Instead of the blasting method, engineers have adopted a number of alternative measures to improve efficiency of the winter construction work, as the project passes through a cold and high altitude zone, with harsh climate and geological conditions, said Li Baolong, CCCC Tianhe's site manager for the Shengli Tunnel project.

China will push "targeted integration" in its centrally administered State-owned enterprises this year to improve their efficiency and encourage qualified SOEs to go public, the country's top State assets regulator said.

Peng Huagang, secretary-general of the State-Owned Assets Supervision and Administration Commission, said the authorities will accelerate the pace of integration in areas of equipment manufacturing, chemicals, maritime engineering, and overseas oil and gas assets this year to enhance the earning capabilities of SOEs.

To improve the efficiency of State capital, China has reorganized 41 central SOEs since 2012, including the merger of China State Shipbuilding Corp and China Shipbuilding Industry Corp, and the structural reorganization of China Poly Group Corp and China Silk Corp.

The country will continue to spin off a number of SOE subsidiaries that lose money, as well as non-primary businesses. And it will further cut the administrative functions of centrally governed SOEs, Peng said.

Thanks to progress of mixed-ownership reforms in China and the reorganization and asset securitization of State capital, the country's central SOEs reported faster profit growth with lower debt-to-asset ratios last year compared with 2018.

Net profits at China's central SOEs amounted to 1.3 trillion yuan ($188.6 billion) last year, jumping 10.8 percent year-on-year.

Peng said the growth rate had picked up steadily in the second half of the year, and the SOE target of "ensuring 7 percent year-on-year growth while striving for 9 percent" was attained.

At the end of last year, the average debt-to-asset ratio for central SOEs stood at 65.1 percent, a drop of 0.6 percentage points from the beginning of the year.

Sixty-four central SOEs saw their debt-to-asset ratio drop from the beginning of last year. In industries such as metallurgy, power, mining and construction, the ratio fell by more than 1 percentage point.

"We will encourage central SOEs and their subsidiaries with strong technological innovation capabilities and promising market prospects to go public," Peng said.

The government also supports central SOEs being listed on the Hong Kong Stock Exchange, Peng added.

China First Heavy Industries Co, which supplies technical equipment, high-tech products and services for a number of industries, including steel, nonferrous metals, electrical power, energy and automobiles, suffered financial losses in 2016 but has seen a notable jump in net profits since 2018, after it steadily deepened its supply-side structural reform and adjusted its operating model.

Liu Mingzhong, the group's chairman, said it has upgraded its products and introduced wider mixed-ownership reform in some of its subsidiaries to tap new industries and provide more diverse products.

The improved efficiency of the SOEs will benefit the whole corporate sector as they provide broad opportunities for the investment and growth of businesses with varied ownership, as well as promote deep integration of industrial, supply and value chains for enterprises of differing sizes in home and global markets, said Liu Xiangdong, deputy director of the economic research department of the China Center for International Economic Exchanges in Beijing.

As a three-year action plan kicks economic reform in China into high gear, changes are gathering steam to remold the country's State-owned enterprises, China's economic backbone.

The 2020-22 action plan, part of the decades-long effort to transform SOEs into competitive, modern enterprises, is expected to leave a strong mark on the world's second-largest economy.

SOEs are active players in China's strategically important and most acclaimed industrial fronts. Those administered by State-owned asset watchdogs, making up only a part of all State firms, account for about a quarter of China's tax income.

As China seeks to develop a modernized economy amid challenges and uncertainties, reforms are the need of the hour. A world baffled by the COVID-19 pandemic, as well as protectionism and unilateralism, only puts this transition to the test.

"In the face of changes unseen in a century, further intensified by the pandemic, it is particularly important to achieve major progress in reform, so that the SOEs can increase their vitality and efficiency and drive broader development of various enterprises," said Liu Xingguo, a researcher with the China Enterprise Confederation.

Despite the impact of COVID-19, centrally administered SOEs posted a 2.1-percent growth in net profits in 2020, official data showed.

China aims to achieve more than 70 percent of the goals in the three-year action plan by the end of this year and make substantial breakthroughs in key areas, said Peng Huagang, spokesman of the State-owned Assets Supervision and Administration Commission.

Central authorities deem the 2020-22 period a "crucial stage" for SOE reform. Making the State-owned economy more competitive, innovative and resistant to risks is among the major goals they have in mind.

A key way to achieve such goals is mixed-ownership reform, allowing SOEs to introduce non-State capital, be it private or foreign.

Strategic investors from outside are encouraged to participate in the management of SOEs, injecting not just funds but also ideas.

In some of the most prominent cases in recent years, private investors were brought into telecom giant China Unicom and business units of major SOEs in sectors including energy, aviation and railways.

In 2020, centrally-administered SOEs alone infused over 200 billion yuan ($31 billion) of non-State capital through mixed-ownership reform.

Meanwhile, a national fund worth 200 billion yuan was set up in December last year to encourage more such moves.

Non-State firms are also drawing investment from State-owned ones. Central SOEs have become shareholders in more than 6,000 non-State companies since 2013, SASAC data showed.

"Two-way mixed-ownership reform has helped all types of enterprises complement each other and grow together," Peng told a news conference recently.

The blending of State and non-State enterprises will increase the resilience of the country's industrial chains, according to Li Jin, chief researcher with the China Enterprise Research Institute.

"The trend will become more prominent during the three-year period. More cooperation between central SOEs, local SOEs and private companies will be forged," he said.

Bringing in non-State investors is deemed as a catalyst for better corporate governance.

Once publicly owned, China's SOEs have been engaged in corporate reform since the 1990s to turn themselves into limited liability companies or companies limited by shares.

This allows the introduction of shareholders, paving the way for the much-advocated transformation into modern enterprises.

So far, such reform has been basically wrapped up, according to Peng.

Authorities are pushing SOEs to overhaul their payroll and human resource management, set up boards of directors, hire professional managers and provide equity incentives.

To encourage more efficient growth, the SASAC will start to assess performances of SOEs in terms of overall labor productivity this year, along with other market-oriented measurements.

Sinopec Zhenhai Refining & Chemical Co is the epitome of the drastic corporate changes taking place in SOEs. An unknown local refiner in the 1970s, it has become a top-notch industry player globally.

The Zhejiang province-based company has streamlined work procedures by 40 percent in recent years and adopted a highly market-oriented incentive system. With better corporate governance and technology, its per capita output surged to 15 million yuan in 2020 from 2 million yuan in 2000.

"Our company's production capacity has tripled since 2000, while our headcount has been reduced and efficiency has been boosted," said Mo Dingge, CEO of Sinopec Zhenhai.

The transition into modern enterprises is imperative as China continues to level the playing field, creating a fairer environment for competition.

Key industries like energy, railways, automobiles, telecommunications and public utilities have been gradually opened up for private and foreign investment.

Li expects "significant progress" to be made in further expanding non-State firm access to State-dominated areas during the three-year period.

Meanwhile, SOEs are downsizing their presence in some fields. They have been asked to exit areas irrelevant to their core business or where their investments lack efficiency and competitiveness.

Central SOEs have divested themselves of such businesses, retrieving 3.45 billion yuan since the end of 2019, SASAC data showed.

In sectors with overlapping investment or homogeneous competition, restructuring between SOEs is encouraged. So far, 41 central SOEs have been regrouped, reducing total central SOEs to 97.

The capital shake-up is directing State-owned assets to concentrate on key industries related to national security, economic lifelines and public welfare, or those with strategic importance.

Emerging technology is one of them. Weng Jieming, deputy head of SASAC, said more investment from central SOEs will be guided toward 5G, industrial internet, artificial intelligence, data centers and other "new infrastructure".

China Baowu Steel Group Co Ltd, the world's largest steel conglomerate, was the outcome of reorganizations between several State-owned steel giants. As a result of better allocation of resources, efficiency was improved and innovation fostered.

"We will spare no effort to build ourselves into a high-tech company," said Chen Derong, chairman of Baowu Steel. "Steel is a traditional product, but we will be a high-tech company in terms of technology, means of production and services."

Cutting regulatory fetters is expected to help SOEs enhance their innovative prowess. Regulators are giving SOE executives more autonomy in making corporate decisions, including drafting annual investment schemes, arranging mixed-ownership reform of subsidiaries and issuing short-term bonds.

The new regulation approach will effectively prevent excessive State intervention in corporate operations, Liu noted.

"Regulators are receding from the front stage to the backstage," he said. "SOEs can decide what to do in accordance with market rules, which will make a big difference."

With the government pledging to enrich services and help solve operational difficulties for both domestic and foreign companies, China's State-owned enterprises are partnering with more foreign and domestic firms to remain competitive amid the economic fallout of the COVID-19 pandemic.

Ansteel Group Corp Ltd, a Liaoning-based centrally administrated SOE, signed a cooperative agreement with Dongfeng Nissan Vehicle Co－a joint venture between China's Dongfeng Motor Corp and Japanese automaker Nissan－to jointly develop technology solutions and new materials for application of new energy vehicles.

Tan Chengxu, Ansteel's chairman, said the company will cooperate in depth with Dongfeng Nissan in areas such as the research and development of new auto steel materials and high-strength steel certification to achieve win-win results.

Supported by seven manufacturing bases across China and iron mines in Australia, Liaoning and Sichuan provinces, Tan said that as the contagion and other disruptions have severely impacted the global economy, the group will build more partnerships with both overseas and domestic firms to build a three-pillar development platform of cement, new materials and engineering services to enhance its competitiveness both at home and abroad.

Eager to pursue sustainable development, China National Building Material Co Ltd－a Beijing-based central SOE, has been working with Europe's Schneider Electric to introduce more digital solutions in its cement mills in China to cut energy usage and upgrade efficiency.

Wang Jie, vice-president and head of the corporate affairs and sustainability development division at Schneider Electric China, said this partnership has helped CNBM's cement plants save up to 5 percent of energy in their production and raise employee work efficiency by 15 percent.

"At Schneider Electric, we believe digital transformation is the most efficient way to realize sustainable development. The extensive use of digital technologies and new energy can not only help enterprises to improve production efficiency and thus improve economic benefits, but also reduce emissions, improve energy efficiency and encourage enterprises to implement more green innovation technologies",Wang said.

To put the country's economic growth on a firmer footing, the State Council released a guideline in May to roll out more measures to better protect foreign trade entities, support the local growth of foreign companies and keep supply chains stable. The guideline urged more support for high-tech industries and stressed the need to encourage foreign investors to invest in China.

China is not only Schneider Electric's second largest market, but also carries out plenty of technological innovation. All these factors offer multinationals strong confidence to enrich their presence in China, said Yin Zheng, executive vice-president of Schneider Electric and president of Schneider Electric China.

Despite the pandemic adding a number of uncertainties to the global economy this year, Schneider's spending in research and development surged 15 percent year-on-year in China in the first seven months of 2020. The company is also eager to recruit more local talent.

Boosted by momentum such as 5G, new infrastructure and next-generation factories, China's investment environment has become more attractive, Yin said, adding that the company has seen a large number of innovation results from its Chinese teams and SOE partners, and the commercial environment in many sectors has notably improved in China.