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China to Introduce SOE Accountability System

The General Office of the State Council has recently issued the Opinions on the Introduction of an Accountability System Targeted at State-owned Enterprises’ Non-compliance Operations and Investments. This is seen as an important move to strengthen the supervision and management of state-owned assets, realise the preservation of and increase in the value of state-owned capital, and prevent the loss of state-owned assets through institutional arrangements.

The Opinions point out that, in accordance with the requirement to improve the modern enterprise system, actions should be taken with an aim to raise the quality and economic efficiency of state-owned enterprises (SOEs). The focus should fall on strengthening the supervision over departments and positions with centralised power, abundant funds, resources and assets. SOEs should be strictly held accountable and mechanisms enhanced in a bid to develop a binding, effective accountability system under which authorities and responsibilities are clearly spelled out. An accountability system targeted at SOEs’ non-compliance operations and investments and a responsibility tracing mechanism should be set up by the end of 2017. By the end of 2020, an accountability regime covering investors and SOEs at all levels will also be established. A responsibility tracing mechanism featuring clear scopes of responsibilities, workflow and procedures will thus be formed.    

Scope of Accountability

According to the Opinions, SOE managers who violate any law or regulation, or the internal administrative rules of SOEs, fail to perform or properly perform their duties and thus resulting in major losses of state-owned assets and other serious consequences shall be held accountable.

The scope of accountability covers corporate control, purchase and sales management, project contracting, transfer of property rights, transfer of shares and assets of listed companies, fixed asset investment, mergers and acquisitions, restructuring, fund management and risk control.

For details of the Opinions in Chinese, please see:

http://www.gov.cn/zhengce/content/2016-08/23/content_5101590.htm

Content provided by Picture: HKTDC Research
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