China is continuing to reduce the number of state-owned enterprises (SOEs) to less than 100, from the current figure of 125, the head of the SOEs watchdog said Friday in Beijing.

"Our target is to develop just 80 to 100 enterprises with top-notch technology and competitiveness through reshuffles by the end of this year," said Li Rongrong, minister of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).

The SOEs restructuring will be carried out through the newly founded Guoxin Asset Management Company. The Guoxin company will become the third in charge of central SOEs' restructuring, following the State Development Investment Corporation and China Cheng Tong Holding Company.

The reshuffle of central SOEs started in 2005, when there were just 196. The number shrank to 169 in 2007, then decreased to 125 through larger firms ac-quiring smaller ones.

China has 46 SOEs listed in the global Top 500 this year, compared to just 16 in 2005. Sectors considered vital to national security are also closely controlled by the SASAC, including banks, electric power, petrochemicals and rail.

These enterprises saw a 27.1 per cent jump in industrial output, which totaled 1.9 trillion yuan (US$280.18 billion) in the first half of the year. And SOEs' investment on fixed assets maintained a steady growth, hitting 388.5 billion yuan (US$57.29 billion), 3.7 per cent lower than the social average.

China's SOEs have made significant development over recent years thanks to the country's rapid economic growth, but they are still inferior to foreign mul-tinational companies in terms of core competitiveness and independent innovation capacity, according to SASAC deputy director Shao Ning.

The country's SOEs produce about 30 percent of the GDP and provide 20 percent of jobs while owning more than 60 percent of all social resources. A total 80 percent of SOEs' profits come from around 10 companies, including Sinopec, CNPC and China Mobile.

"Enterprises such as PetroChina can boast of the world's highest market capitalization, yet they have neither products that rank first in the world, nor do they have a world-famous brand," Li said last month.

In line with economic globalization, many Chinese SOEs have tried hard to improve product quality and efficiency by stepping up their expansion into the international market in order to echo the central government's "go out" strategy.

"On one hand, the "go out" strategy meets the company's global expansion goal; on the other, it's to balance China's massive foreign exchange reserves earned by years of export surplus," said Wang Yong, analyst with the Guotai Junan Securities.

(Global Times July 26, 2010)