It is reported that the latest Chinese central government plan for reforming state-owned assets and state-owned enterprises (SOEs), titled the Plan for Further Deepening the Reform of State-Owned Assets and Enterprises (2026–2029), has already been released. Local authorities across the country have begun implementing the directive. Similar to previous iterations of SOE reform initiatives, this plan has not been disclosed to the public. However, given that state-owned capital plays a pillar role in national economic development, this new round of reform bears directly on the lifeline and future prospects of the Chinese economy, drawing extraordinary attention. Judging from multiple sources, including the shared rhetoric used in local policy deployments, the new round of state-owned asset and SOE reform focuses on executing the relevant requirements of the 15th Five-Year Plan. With the objectives of strengthening main functions and enhancing core competitiveness, it outlines key tasks such as concentrating state capital in fields concerning national security and economic lifelines, public services and emergency response, as well as strategic emerging industries.
The new reform carries forward the general direction of the 2020 Three-Year Action Plan and the 2023 Deepening and Upgrading Action," continuing the approach initiated in 2013 that centers on "managing capital" rather than managing corporate operations. It consistently adheres to the core goal of "making state-owned capital and enterprises stronger, better, and bigger," maintaining the guidelines and philosophies established in the 2015 "1+N" SOE reform framework. Furthermore, its integration into the 15th Five-Year Plan as a core mandate signifies that, even after more than a decade of reform, making state-owned capital "stronger" remains a long-term endeavor that cannot be accomplished overnight.
If China’s previous efforts to grow bigger and stronger primarily focused on "preserving and increasing the value" of state assets with an emphasis on scale, the state-owned asset and SOE reform centered on "managing capital" will now need to take the upgrading of quality as its primary task. Expanding scale should be the inevitable byproduct of becoming "stronger and better", rather than the primary goal. Nevertheless, while it represents an extension of the existing reform path, the country’s state-owned assets and SOE reform under the new landscape exhibit distinct characteristics from prior phases of action. It has become the primary driver for the systemic restructuring of the state-owned economy to advance new quality productive forces and achieve high-quality development.
The State-owned Assets Supervision and Administration Commission (SASAC) previously directed state-owned assets and central SOEs to pool their resources to achieve the five targets of value enhancement, innovation leadership, industrial upgrading, reform empowerment, and high-quality party building. This directive required them to continuously enhance their core functions and core competitiveness, making SOEs and capital stronger, better, and bigger to better serve the overall work of the Party and the state, high-quality economic and social development, and the protection and improvement of people's livelihoods. This demonstrates that the new round of reform reinforces the primary roles of state-owned assets and SOEs, namely high-quality development driven by value enhancement, service to national strategies, and the securing of public livelihoods.
This implies that becoming "stronger and better" is not merely an economic or corporate-level consideration, but rather a strategic national imperative. Consequently, the reform of state-owned assets and SOEs is no longer confined to institutional and mechanistic adjustments at the micro-enterprise level. Instead, it has become an integral part of a systemic layout and reform under the broader framework of national strategy. Therefore, this new round of reform requires both an inward focus and an outward perspective, using internal optimization to manage external demands. On the one hand, the reform must align with the grand strategies of building new quality productive forces and high-quality development to meet national strategic needs. On the other hand, based on this foundation, enterprises must exercise their subjective initiative to drive value creation.
In retrospect, although the core approach of "managing capital" was proposed early on in SOE reform, the process has been far from smooth. Naturally, the challenge came not only from the reform itself but also from constraints and limitations imposed by the market environment, capital market development, and state asset management policies. The earliest mixed-ownership reforms actually aimed to drive the securitization of state-owned assets to introduce private capital, thereby improving the efficiency of state asset management and leveraging securitization to help SOEs establish market-oriented operating mechanisms. However, judging by the outcomes, although most SOEs successfully established modern corporate governance systems and achieved "de-administratization" structurally, the original intent of mixed ownership was not fully realized. A substantial number of SOEs merely mixed ownership without undergoing true reform, resulting primarily in "mixing" between different state-owned entities. After the global financial crisis, once SOEs regained their footing, the pressure to implement mixed-ownership reform and grow bigger and stronger led state capital to embark on an expansionary trend. This manifested not only through "the state advances as the private sector retreats", where state firms acquired listed private assets, but also through mixed business operations, in which they diversified and penetrated high-yield sectors like finance and real estate, transforming into a new generation of all-encompassing giant firms.
The round of state asset reform that began with the 2000 Three-Year Action Plan emphasized professionalization, aiming to become "stronger" by "focusing on core businesses" and using government funds to drive expansion into new fields. This marked the beginning of a substantive shift of state assets from "asset management" to "capital management". The current round of state-owned asset and SOE reform represents a comprehensive transition and substantive deepening of this capitalization. During this year's National Two Sessions, Zhang Yuzhuo, Director of SASAC, stated that during the 15th Five-Year Plan period, the goal of further deepening reform is to enhance core functions, improve core competitiveness, and make state-owned enterprises and capital stronger, better, and bigger. New breakthroughs must be achieved in three areas, which are promoting the "three concentrations" (consolidating state-owned capital into security, public welfare, and strategic emerging industries) of state capital, enhancing the vitality and efficiency of central SOEs, and improving regulatory effectiveness. If the previous reform focused on internal consolidation and trade-offs within individual enterprises, the new round focuses more on adjusting and integrating the state-owned asset system under the greater condition of the entire state-owned economy.
This means the new round of reform must go a step further, achieving a systemic realignment of the state-owned economy through the "three concentrations". This is essentially an upgrade and restructuring of state capital management. While previous approaches of "advancing in some areas while retreating from others" focused on preventing the "disorderly expansion" of SOEs, the new round places greater emphasis on their "professionalization" and "functionalization. In particular, the quantitative targets currently circulating regarding the "three concentrations" signify a comprehensive deepening of capital management, or an upgraded version of "managing capital". Compared to previous flexible requirements to "return to core businesses," this current plan introduces hard quantitative targets. For instance, by 2029, over 88% of the revenue of central SOEs must be concentrated in 20 key industries. The proportion of state capital clustered in three core areas must be at least 70%, and the revenue share of strategic emerging industries must reach 30% or higher. Furthermore, requirements regarding market value evaluation weights and dividend payouts all signal the full implementation of "managing capital". In terms of qualitative indicators, institutional development, corporate governance structures, and regulatory improvements are all oriented toward becoming "stronger and better". As some analysts note, the true test of this reform is not whether central and state-owned enterprises possess systems, workflows, or reform ledgers, but whether these systems and workflows can help enterprises make higher-quality judgments. This effectively raises the capability requirements for "managing capital" in this new phase, defining the core essence of state asset reform during the 15th Five-Year Plan period.
In this regard, the new round of reform can be understood on two levels. First, the platformization of state assets centered on realigning the state-owned economy; second, the functionalization and professionalization of SOEs centered on value enhancement. This aligns closely with the approach long advocated by ANBOUND, which suggests leveraging "mutual funds" to drive the "capital management" model of state assets. At the platform level, capital operations are utilized to realign and optimize the structure of state assets to achieve the "three concentrations". Meanwhile, at the corporate level, value enhancement and asset appreciation are pursued through the augmented strength, professional operations, and enhanced functionality. This holds true not only at the central level but likely even more so at the local level. The central government has already established multiple investment platforms acting as sovereign wealth funds, such as China Investment Corporation (CIC) and China Reform Holdings (Guoxin), alongside strategic investment platforms like China Chengtong. Similarly, local governments are driving the transformation of local government financing vehicles (LGFVs). Naturally, under the pressure of local debt resolution, local state-owned asset platforms face greater difficulties in shifting models; they urgently need to build investment capabilities while simultaneously absorbing the pressure of defusing local government debt. At the central and state-owned enterprise level, the associated pressures and challenges lie more in improving and unlocking investment efficiency after narrowing focus to core businesses. For state assets, this presents a challenge in establishing new models and a new layout for the state-owned economy. For SOEs, it marks a critical juncture to discard old paradigms and embrace new opportunities.
It must be emphasized that after experiencing a period of rapid development driven by a "land-based economy", the Chinese economy is comprehensively entering a new cycle of an "equity-based economy". As a senior researcher at ANBOUND previously stressed, this is not a shift confined to a single sector or locality, but a sweeping market trend. Under this backdrop, the new round of state-owned asset and SOE reform must capture this trend, adapt to the new dynamics of capitalization and securitization, and comprehensively upgrade the capacity to "manage capital".
Final analysis conclusion:
All signs indicate that a new round of state-owned asset and SOE reform is steadily taking place in China. While this initiative essentially carries forward the established mandate of shifting toward capital management, its primary focus under changing conditions has turned toward a strategic realignment of the state-owned economy. This means there is a comprehensive upgrade and systemic restructuring of how state capital is managed to fulfill the 15th Five-Year Plan's objectives of driving high-quality development and new quality productive forces.
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Dr. Wei Hongxu is a Senior Economist of China Macro-Economy Research Center at ANBOUND, an independent think tank.
