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Salaries of Executives in State- Owned Enterprises Linked to Party-Building Effort

On 17 April, Premier Li Keqiang told a meeting of top state-owned enterprise (SOE) executives at the State-owned Assets Supervision and Administration Commission in Beijing that the government was reconsidering a 2015 policy capping their pay, and promised more competitive rates tied to performance. According to a Xinhua report, executives’ pay and other rewards or punishments will be linked to how well individuals carry out ‘Party building’ work. This was part of the government’s attempt to reform SOE management in order to restructure, modernise, and internationalise the state sector. At the time, the news was seen as an effort to re-establish the role of the Party in China’s state industry, and retain loyal and talented managers. Since 2013, President Xi Jinping has been pushing for China’s state sector—whose worth is estimated at twenty trillion USD—to embrace structural reforms while reining in state sector managers’ pay. In 2017, China once again pushed forward state-enterprise reform, with ten large state-owned enterprises started selling stakes in their units. However, the pace of the reform has remained slow, and concern over unrest by laidoff state workers has similarly stalled reforms of state-owned steel and coal enterprises. KL

(Sources: Bloomberg; Reuters; South China Morning Post; Xinhua News)

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