III Focus on Replenishing Social Security Funds to Coordinate Improvement of Overall Social Security System with Reforms of State-Owned Enterprises

According to the requirement of establishing and perfecting the market economic system, reform of state-owned enterprises is far from completion, and the state-owned economy has advanced too much and retreated too little under the layout adjustment strategy of “the advance and retreat of state-owned economy in some areas”. Besides, state-owned economy has further strengthened its monopoly in the guise of providing “public welfare” services. There are many mistakes in SASAC’s (State-owned Assets Supervision and Administration Commission) positioning and management of state-owned enterprises. Our long-term aim is to make sure state-owned assets shall be shared by all the people. However, many factors constitute obstacles for us to achieve that goal. In addition, the gap of social security system is getting larger than ever. As a result, we will focus on replenishing social security funds with state-owned assets. We will make sure state-owned assets serve the public interest in the real sense as required by the market-oriented reform, by the concept that state-owned assets are shared by all the people. Only by doing so shall we facilitate the perfection of the social security system and improve people’s livelihood, and will potential demands be released. In broader sense, it will help to promote urbanization, stimulate enterprise innovation, and bring about transformation of economic development mode.

A Rationally Position and Define Logic Boundary of State-Owned Enterprises

State-owned enterprises in the real sense should only exist in links of the production of public goods and quasi-public goods where market fails to function or fails to provide public welfare services. From this point of view, current state-owned enterprises and their governing department are transitional entities. During the 13th Five-Year Plan period, the reform of state-owned enterprises does not simply mean reducing the number of state-owned enterprises. Apart from that goal, we aim to significantly reduce the capital and market share of state-owned enterprises and to expand the space for the development of private economy. We will rationally position the functions of state-owned enterprises, determine the logical boundary of state-owned enterprise, gradually phase out state-owned enterprises in competitive areas in the near and medium term, and transform them into mixed ownership companies with diversified equities. For state-owned enterprises in monopoly areas, we will classify them as monopolistic business or competitive business, split competitive business as soon as possible, and strengthen governmental supervision in nature monopoly industries. We will also step up market-oriented reforms in industries where natural monologue characteristics fade out due to technological progress and the transformation of market structure. Eventually, we aim to transform state-owned enterprises into non-profit entities constrained by public laws and establish an effective government structure.

В Replenish Social Security Funds with State-Owned Capital Withdrawn from State-Owned Enterprises

As people’s enterprises, “state-owned enterprises” are not supposed to dispose all profits. Instead, they should turn some profits to the government as investment in social security. This move can effectively fill in the gap of social security fund, increase effective supply of basic public services, and significantly reduce tax burden for low-income groups. Besides, it can effectively limit the investment scale of “state-owned enterprises”, reduce investment errors, and finally perfect the social security system. Thereby, three specific methods are proposed as follows:

Turn in Profits of State-Owned Enterprise to Supplement Social Security Funds

In principle, all the profits of the “state-owned enterprises” should be turned in to national finance. If state-owned enterprises need capital to develop business, competent departments need to make an examination before government allocates the money. Only a fool will hand over his or her hard-earned money to others without caring for loss or gain. The self-financing system is only applicable in the initial stage of the reform of state-owned enterprises.

After 30 years of the reform of state-owned enterprises, it is necessary to restore the original characteristics of “state-owned enterprises”. For that purpose, we must accelerate the operational budget reform of state-owned capitals by raising the profit handover ratio of state-owned enterprises from current 5%—10% to 50% or more. All the profits turned in shall not be utilized within SASAC, but to be used to replenish the social security fund.

Allocation of Liquidated State-Owned Assets

During the “13th Five-Year Plan”, we will continue to promote “state-owned enterprises” restructuring. Regardless of reform forms, through either implementation of mixed ownership or the overall transfer of property rights, all or some of the realized assets of reformed state-owned enterprises shall be appropriated to social security system.

State-Owned Shares to be Held by Social Security Fund

In the future, after the shareholding reform of “state-owned enterprises”, state-owned shares shall be held by the social security agencies. For listed state-owned enterprises where state-owned shares occupy the biggest proportion, their state-owned shares shall gradually be held by social security institutions as well.

C Reposition Functions of State-Owned Assets Supervision and A dministration Commission

The orientation of reforms in “state-owned enterprises” determines that SASAC is a transitional entity. However, even during the transitional period, the function of “SASAC” needs to be repositioned. To abandon the role of “mother-in-law and boss”, SASAC shall change the management method of state-owned assets characterized by “state-owned assets preservation and appreciation”. During the “13th Five-Year Plan”, we will push forward the transformation of shareholding system in state-owned enterprises by focusing on “cost-revenue” relation of the liquidated state-owned assets and finalize the duties and evaluation criteria for SASAC. To achieve that goal, SASAC shall develop a comprehensive budget system covering both liquidating and operational budget system of state-owned assets. In addition, as guardian of state-owned assets, SASAC shall effectively lower payroll standards and restrain professional consumption behavior in state-owned enterprises.