China's SOE revamp could lead to problems

Chen Zhiwu, a member on the international advisory board of the China Securities Regulatory Commission, says diversified ownership could increase corruption.

A plan to diversify the shareholder structure of state-owned enterprises SOEs will be a temporary solution for their overcapacity issues and may trigger problems, according to Chen Zhiwu, a member on the international advisory board of the China Securities Regulatory Commission.

The plans, unveiled in the third plenum of the 18th Central Committee last November, encourage SOEs to sell stakes to the private sector and diversify their ownership structure as part of broad efforts to open up China’s markets.

Introducing private capital into SOEs should help companies improve profitability and efficiency, Chen told FinanceAsia at China’s annual Boao economic forum.

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