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What mixed signals on TV say about China’s on-again, off-again state firm reforms

For anyone tracking the progress of China’s reforms – or lack thereof – the three items on China Central Television’s prime time news programme on Tuesday gave the latest telling examples of conflicting signals from the mainland leadership.

Leading the news was a lengthy report in which President Xi Jinping told senior officials and top business executives that the Communist Party would strengthen its “unswerving leadership” over the state-owned enterprises (SOEs).

This comes at a time when Xi has launched forceful measures including an unprecedented anti-graft campaign to boost the party’s control and legitimacy.

It was then followed by another lengthy report in which Xi, head of the party’s leading group for overall reform, urged (probably many of the same) officials in a different meeting on the same day to seize every minute to advance reforms, saying that they should overcome whatever difficulties to “resolutely” carry out changes.

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Later in the programme came the details of plans to settle 100 million migrants in cities, which would become a new driver of economic growth.

Reports on such seemingly conflicting objectives look set to raise confusion and concern over the pace of change while the economy slows and foreign businesses make louder complaints about an increasingly difficult operating environment in China.

Ever since Xi came to power late in 2012, his administration has trumpeted reform and opening up as the way forward for the Chinese economy. In November 2013, the top leadership approved an ambitious reform blueprint which won initial international praise. The following month Xi took charge of the new leading group for overall reform.

Last month state media marked with much fanfare the 1000th day of the group’s work, lauding its achievements. But the overall progress of reform has been very uneven, to say the least. For instance, many observers have noted a lack of any significant breakthrough in reform of SOEs promised in the blueprint. Overhauling SOEs is considered a crucial part of transforming the Chinese economy.

Xi’s speech on the SOEs on Tuesday clearly stated the party would strengthen control over SOEs and exercise more oversight instead of allowing market forces to play a “decisive” role as earlier promised.

At the high-level meeting, also attended by other Politburo Standing Committee members including Liu Yunshan, Wang Qishan, and Zhang Gaoli, Xi made it abundantly clear that the party leadership is “the root and soul” for SOEs.

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He said the party committees should be an integral part of the SOEs’ corporate governance structure and their legal status should be properly defined.

His speech seems to have been aimed at ending the long-running debate over whether the practice of separating government from business should be fully implemented at the SOEs so as to make them more productive and efficient.

That debate started when China began opening up in the 1980s. Many economists and officials believed the SOEs would not become efficient and productive modern enterprises unless the government stopped meddling in day-to-day business decisions.

Over the years, whether the party committee or the board of directors should have the final say over business decisions has become a running issue as the government tried to transform the SOEs by listing most of them on the domestic and international stock markets.

There has been anecdotal evidence that boards at listed subsidiaries of SOEs could reject proposals approved by the party committee. And until recently there were hopes that boards would be given more power to hire quality executives from home and abroad as well as setting competitive pay packages.

Now Xi’s speech has made it clear that the board of directors should remain secondary to the party committee. Although Xi did say that SOEs would continue to set up a modern enterprise system to become “stronger, better, and bigger”, the past history of SOEs, weighed down by politically motivated decisions, does not augur well.

While reforms of SOEs appear to have gone backwards, the authorities have made great strides to expand urbanisation.

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On the same Tuesday, the cabinet announced long-awaited details of the plan to settle 65 million migrants in cities by 2020, with the eventual goal of settling 100 million people.

According to the plan, at least 13 million migrants would be able to qualify for urban household registration, or hukou, annually over the next five years so that they could enjoy the same government services, including health care and education, as urbanites. By 2020, the amount of people living in cities and having relevant hukou would hit 45 per cent of the population, compared with 39.9 per cent at the end of 2015.

Local media reports have indicated that the migrants swamped the local police stations to seek registrations and overwhelmed their computer systems.

Wang Xiangwei is the former editor-in-chief of the South China Morning Post. He is now based in Beijing as editorial adviser to the paper