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Economist: SOE Reform, New Chapter in China's Market Economy
The success in the state-owned enterprises reform has opened a new chapter in China's market economic transition, and the reform of the 160 giant state enterprises and the four pillar state banks will be the next step, analyst in Hong Kong said Saturday.
"The success of the reform depends on corporate system reforms and market competition," said Yiping Huang, head for Asia Pacific Economics and Market Analysis of Salomon Smith Barney (SSB).
In his interview with Xinhua, the SSB analyst said the reforms are likely to put the fiscal system under mounting pressure, but a smooth transition should bring high economic growth and booming property market.
Huang stressed that the future reform efforts should concentrate on the 160 giant state-owned enterprises and four pillar state-owned commercial banks. Disciplined government behavior and effective corporate systems are of equal importance, he noted.
"Modern mechanism and market competition are keys to success, and listing of these state-owned firms and banks on the stock market or adopting debt-for-equity are only partial solution," Huang explained.
Meanwhile, analysts from the Hong Kong-based HSBC believed that commercially driven mergers raise hopes of enhancing the operational efficiency of the state-owned enterprises and offer remedies to deep-rooted structural problems.
"We reckon mergers between listed companies will form only part of a comprehensive merger and acquisition process, which is expected to sweep through most overseas listed Chinese companies in the coming months," they said.
They noted that the aim is to boost profitability and competitiveness, improving Chinese companies' ability to attract foreign management and technology via strategic alliances before heavy competition develops after China's WTO entry.
"We believed undervalued China-registered companies with common shareholding bases, as potential targets, could enjoy operational efficiency gains from mergers," the HSBC analysts said.
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