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China Tries to Plant Good Corporate Governance Into SOEs
Bank of China (BOC) President Liu Mingkang told the ongoing 2nd Asia Development Forum that the Chinese government has made unremitting efforts to plant good corporate governance into Chinese enterprises in its state-owned enterprises (SOE) restructuring drive aimed at enhancing their competitiveness, business management and government-business relationship.
Liu, who doubles BOC Board Chairman, said that the restructuring of the state-owned enterprises has evolved three phases since China's opening-up and economic reform started in 1978 and its initial reform from 1978 to 1993 focused on removing the impact of the traditional planned economy on enterprises and increasing the role of the market and granting enterprises more autonomy in doing business.
During the second phase from 1993 to 1998 the Chinese government focused its efforts on introducing modern mechanism into the SOEs which assume core dimensions of clarification of ownership and rights as well as obligations attached, separation of government administration from business management and the introduction of sound corporate management, he said.
From September 1999 on, the Chinese government has quickened the reform and opening-up process to meet the challenges for corporate governance that is the core of modern mechanism in running enterprises.
Liu stressed that facing challenges from the New Economy and globalization as well as China's upcoming accession into WTO, there is an urgent need to plant into Chinese enterprises the good corporate governance that ensures the checks and balances regime between shareholders and management.
Defining the parameters of good corporate governance, the BOC president highlighted six key elements that include a set of clearly defined strategies with a broad vision, a transparent and sound decision-making process, information disclosure arrangement based on prudent accounting norm and practices, the establishment of well-defined accountability, responsibility with strict & explicit targets as well as relevant effective motivation schemes and checking mechanism, a system ensuring independent, full and good play by all board members and fairly protecting interests of all shareholders, and education and cultivation of the staff at all levels.
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