The rostrum of SCIO routine policy briefing [Photo by Wu Xiaoshan]
Speaker:
Xu Nanping, vice minister of Science and Technology. Zhang Xiwu, deputy secretary general of the State-owned Assets Supervision and Administration Commission (SASAC). Peng Huagang, spokesman of the State-owned Assets Supervision and Administration Commission (SASAC)
Chairperson:
Xi Yanchun, vice director-general of the Press Bureau, State Council Information Office
Date:
May 20, 2016
Xi Yanchun
Ladies and gentlemen, good morning. Welcome to today’s State Council policy briefing. This week’s State Council executive meeting discussed a series of important policies and measures. Today we’re glad to have Xu Nanping, vice minister of Science and Technology to brief us on the sci-tech commissioner system. And we also have Zhang Xiwu, deputy secretary general and spokesman Peng Huagang of the State-owned Assets Supervision and Administration Commission (SASAC) to introduce us the reform of State-owned enterprises(SOEs).
Xu Nanping
The CPC Central Committee and the State Council attach great importance to three rural issues: agriculture, rural development and farmers. President Xi Jinping has stated that agriculture, farmers and rural areas should not be ignored at any time. Premier Li Keqiang also emphasized that China should revive agriculture through science and technology and all sci-tech fronts should serve and support agricultural development.
Currently, our country is at a crucial stage of building a moderately prosperous society, when agriculture development and rural areas are facing major challenges. The agricultural sector has become the weaker area of four modernizations in the process of pursuing a moderately prosperous society with its low efficiency of land output, resource use and labor production.
The fundamental solution is to improve the competitiveness of agricultural sector through technological innovation. With economic development undergoing a new normal period, we should expand the sci-tech commissioner system to lead production factors such as science and technology, information, talent and management to the grass-roots in rural areas.
To enhance the sci-tech commissioner system in agriculture and rural areas, it’s important to expand the main operational body for modern agriculture, enhance the competitiveness of the agricultural sector and help raise farmers’ incomes.
The issue of the Opinions for the sci-tech commissioner system is crucial at this time. The system was first launched in Nanping, Fujian, an eastern province of China and has a history of over a decade. In 2003, President Xi Jinping, then secretary of the provincial party committee of Zhejiang, delivered an important instruction, saying that the sci-tech commissioner system is an innovative measure aimed at solving the scientific and technological difficulties facing farmers.
In 2009, the Ministry of Science and Technology, along with other related departments, introduced an opinion on encouraging more sci-tech commissioners to start businesses in rural areas, taking the sci-tech commissioner system to a new stage.
From 2012 to 2016, the sci-tech commissioner system was included in the important central government document.
Currently, over 700,000 sci-tech commissioners are actively working in rural areas to help over 60 million farmers make innovations and start businesses.
The system has shown and taught farmers how to operate in a more modern way, assisting them to make more money. The Opinions introduced by the State Council is a strategic arrangement for promoting sci-tech work in rural areas.
Xu Nanping:
The release of the Opinions brings the first national design and layout for sci-tech commissioner work. The Opinions clarified four goals – strengthening the sci-tech commissioner team, improving related rules and regulations, cultivating new agricultural business and service entities, and promoting the in-depth integration of the primary, secondary and tertiary industries in rural areas.
It also deployed three major tasks – lifting the agricultural sci-tech innovation level, improving new agricultural technology service system, and accelerating the promotion of agricultural sci-tech entrepreneurship and poverty alleviation.
It also gained six policy supports.
First, strengthening the sci-tech commissioner team. Sci-tech personnel from universities, scientific research institutions and enterprises are encouraged to carry out entrepreneurship and related service in rural areas, and college graduates, returned migrant workers, demobilized soldiers, retired technology personnel, rural youth and women are also encouraged to get involved in rural entrepreneurship to expand the sci-tech commissioner team.
Second, improving sci-tech commissioner selection policy. The salary, welfare and posts of sci-tech commissioners in their original institutions will be kept for five years during their service in rural areas.
Third, strengthening the transfer and transformation of rural sci-tech achievements, clarifying the legal benefits of sci-tech commissioners, encouraging them to carry out entrepreneurship service through some methods, such as, transfer and technology shares.
Forth, strengthening the support for sci-tech commissioners to start up businesses, making use of the leverage function of fiscal funds, guiding financial institutions, such as policy banks and commercial banks, to increase credit support, and attracting social capital to participate in rural sci-tech entrepreneurship.
Fifth, building a platform for sci-tech commissioner’ entrepreneurship, establishing a mass entrepreneurship environment in rural areas, and creating a professional, social and convenient rural sci-tech entrepreneurship environment.
Sixth, developing an innovative sci-tech commissioners’ social service, continuously implementing the selection of sci-tech commissioners, launching a registration system for commissioners, and supporting social organizations, such as sci-tech commissioners’ associations, to carry out related services in e-commerce, finance, and law.
Next, we will strive to implement the Opinions in order to attract thousands of sci-tech commissioners to go into rural areas and promote the transformation of sci-tech achievements in such areas. I hope that related departments could cooperate closely, local governments could deeply promote the policy, and people from all walks of life, including media friends, support its implementation to raise the sci-tech commissioner work to a higher level. Thanks.
Xi Yanchun:
Thank you for your introduction, Mr Xu. Now let’s welcome Mr Zhang to give us an introduction.
Zhang Xiwu:
Thank you. Good morning, my media friends. I feel very glad to meet you here, and I would like to take this opportunity to give you an introduction on the further reform of the SOEs. My colleagues and I are very pleased to answer your questions.
The CPC Central Committee and the State Council pay top attention to the reform and development of SOEs. President Xi Jinping has delivered important speeches and made instructions on SOE reforms several times. He has also spoken at the central economic working conference. Premier Li Keqiang clearly noted in this year’s government work report the need to promote the development of SOEs based on reform and improve their core competitiveness. Vice-Premiers Zhang Gaoli and Ma Kai, and State Councilors Yang Jing and Wang Yong have also deployed work on the further reform of SOEs.
Zhang Xiwu:
Now let me give you a brief introduction on the further reform on SOEs in three aspects.
First, why should we deepen SOE reform? Last August, the CPC Central Committee and the State Council issued a guideline to deepen reform of SOEs, which gives clear directions on SOE reform. Since then, positive progress has been made in SOE reform. Thirteen documents have been rolled out to boost the reform and nine documents are under review. Modern enterprises system have been further established, 85 SOEs have established standardized board of directors, and enterprise restructuring are being promoted. In 2015, 12 SOEs were regrouped. The State-owned Assets Supervision and Administration Commission (SASAC) has cancelled 21 regulation items, including those delegated to local governments. However, we know that there are still some major problems in the SOEs.
First, with the increasing economic downward pressure, it is a tough task for unprofitable enterprises to make profits and slash excess production capacity. Second, some enterprises don’t have core businesses and concentrated investment. Third, there are too many management layers and management efficiency is low. Fourth, we have to carry forward income distribution system reform and cut redundant personnel. Fifth, a lot of work has to be done to deepen reform on the separation of water supply, electricity supply, heat supply and property management.
SASAC has conducted studies many times to find out the problems in SOEs, and formulated specific work plans for SOEs to improve efficiency and quality. Deepening SOE reform is an important measure to boost supply-side structural reform, and its purpose is to improve quality and meet consumers’ demands.
Zhang Xiwu:
Second, what steps should be taken to deepen reform? The overall requirements for the SOE reforms are implementing the decisions made by the CPC Central Committee and the State Council and the five new development concepts - innovation, coordination, green development, opening-up, and sharing. We will make efforts to optimize structures of SOEs, strengthen their competitiveness in core businesses and improve their efficiency within three years. Management of most SOEs should be reduced from the current five to nine levels to no more than three or four levels, and legal entities affiliated with SOEs should be cut by 20 percent. Meanwhile, non-profitable enterprises in the steel, coal, and nonferrous industry will make profits.
Efforts will be made in the following aspects: first, strengthen reform on the supply-side reform and optimize structures of State-owned assets; second, cut management layers; third, integrate resources and strengthen core businesses; fourth, promote reform based on innovation and develop new economy; fifth, cut costs and improve efficiency.
Third, how to boost the reform? First, enhance leadership; second, transform the function of State-owned assets supervision departments; third, fully invigorate the reform vitality. On the whole, we have to build confidence and forge ahead bravely to boost SOE reform so as to make a good beginning for the 13th Five-Year Plan period (2016-20).
Xi Yanchun:
Thank you, Mr Zhang Xiwu. Now questions, please.
China Central Television:
I’d like to ask Mr Zhang a question. The executive meeting of the State Council on May 18 noted that China’s SOEs don’t have strength in its core businesses. Just now you also stressed integrating resources and making efforts to strengthen and optimize core businesses. What measures will the State-owned Assets Supervision and Administration Commission (SASAC) adopt to guide SOEs to optimize their core businesses? Meanwhile, is there any schedule and timetable being set for SOEs to close down“zombie companies”? Also, coal and steel are the primary sectors for reducing overcapacity, so what’s the plan to limit their output? In addition, there is a saying that the reshuffle of SOEs is bundling the good with the bad. Do you think the target of cutting overcapacity can be achieved through such administrative means?
Zhang Xiwu:
Your first question is about highlighting the core businesses for SOEs, which is an important part of reforms for SOEs. For an enterprise, its core businesses can set its direction, primary focus as well as its achievements. Core businesses can also be compared to the trunk of a tree, which can determine whether the tree can become a towering one. Thus, focusing on the main businesses is the right path for the development of enterprises. Enterprises should not be driven by small profits in sight, not on temporary interests. On the contrary, SOEs should pursue general benefits for the nation, sticking to the right path of conforming to a national development strategy. Focusing on the core businesses should also concentrate resources and energies on sharpening the competitiveness of an enterprise, becoming the essential force to lead the development of the industry. In addition, strengthening the main businesses is the right course to achieve sustainable development. Enterprises should be determined, persistent and confident in building brand companies. Also, the “spirit of craftsmanship” should be carried forward to create first-class products, services and brands, and win the market.
Zhang Xiwu:
As for “zombie enterprises”, we initially plan to take three years to close down 345 of them. We will also spend two years on cutting 10 percent of the production of coal and steel. We are confident and determined in reaching the two targets. The last question you raised is associated with the reshuffle of SOEs. Last year, six pairs of enterprises were reshuffled. Judging from the past year’s performance, the effects are quite positive.
This year, we will further promote the reshuffle of SOEs, upholding principles in four aspects: First, we should adhere to serving the national strategy, letting SOEs play a better role in that strategy. Second, the general situation of structural adjustment of a State-owned economy should be considered in implementing the national industrial policy and adjusting key industrial layout. Third, the effects of reshuffle should be conducive to optimizing the allocation of resources and promoting the upgrading and quality and efficiency of SOEs. Fourth, the enterprise-based reshuffle should be standardized in accordance with market rules and with full respect for enterprises’ will.
China Radio International:
My question is for Mr Xu. Can you brief us on the specific measures raised in the newly issued Opinions on Sci-Tech Commissioner System? Thank you.
Xu Nanping:
There are several highlights in the Opinions.
First, the work related to sci-tech commissioners used to be promoted by departments and local governments, but this time, it was issued by the General Office of the State Council. The move signals that the sci-tech commissioner system has become nationally important.
Second, the Opinions explicitly require an organized and long-acting mechanism with coordination between departments and integration of central and local efforts.
Third, the Opinions will address concerns of the commissioners. Either they volunteer or are assigned to their outreach posts, and they are assured that they can return to their original institutions within five years. The salary, welfare and posts of sci-tech commissioners in their original institutions will be kept for five years during their service in rural areas. And sci-tech commissioners have preference in for promotion.
Fourth, policies are flexible and favorable for sci-tech commissioners to start their own businesses in rural areas.
Fifth, there will be an optimized atmosphere concerning innovation and entrepreneurship, in order to better serve the commissioners’ work in rural areas or at the grass-roots level.
Sixth, the sci-tech commissioners will devote themselves to help farmers achieve prosperity. They will be given respectable status for their endeavors. I hope that the press will honor the commissioners’ work with media coverage and recognition, which will in turn give them moral support.
In conclusion, the content of the Opinions is comprehensive, and it will promote the work related to sci-tech commissioners on a national level.
Thank you.
China Daily:
Mr Zhang, this year’s government work report proposed streamlining (SOEs) and increasing their competitiveness, and the SASAC also put forward a draft plan recently on the reform of SOEs, urging them to increase efficiency.
Streamlining the corporate structure and increasing competitiveness is a new concept, and I want to know, what are the specific details, and what is the relationship between the two aspects? Thank you!
Zhang Xiwu:
Thanks for the question, and I think this is the key part of the draft plan.
The final purpose of the reform is to increase the efficiency and competitiveness of SOEs, and as I understand it, streamlining the structure is one measure, and a way to increase their competitiveness. Increasing efficiency is the final goal.
Streamlining corporate structure involves four aspects. First is to reduce their affiliates. SOEs must cut the management levels, reduce affiliated enterprises, shed sideline work and focus on core businesses to solve the problems caused by the planning economy, such as wide coverage areas and long industry chains. Second is to cut low-efficient sideline work. SOEs should cut the affiliated businesses that are less efficient to increase the enterprises’ operation efficiency and State-owned assets’ operation efficiency. Third is to integrate the whole State-owned enterprises to reduce their profit loss areas, help solve their major problems and reform the ones in difficulty and reorganize the “zombie” enterprises. Fourth is to reduce the burdens of the enterprises. SOEs must cut down the obstacles that are not in line with their core businesses, and reduce their burden to take part in the market competition equally.
After streamlining the enterprises, how to improve their quality and efficiency?
According to my own understanding, the first is to make the company a true market entity. To achieve that, enterprises should follow market rules and enterprise development rules to improve the modern enterprise system, strengthen the system reform and speed up the transfer of enterprises’ operation system. Second is to boost scientific management. Management is always key for enterprises, and our focus should be on cutting redundant management so as to reduce costs, increase efficiency and improve management. Third is to promote innovation. Innovation development is key for the whole society, and it is also the main tune for enterprises, so enterprises should set up a platform for mass entrepreneurship and innovation, speed up technological innovation and promote technological reforms. Fourth is to focus on core businesses. SOEs should focus on, stick to and strengthen their core businesses to improve their market competitiveness to better serve the national development strategy.
What I want to mention is that in streamlining enterprises and increasing efficiency, SOEs should not exit from their advantageous fields, but integrate the resources to increase the enterprises’ vigor, influence, controlling and risk-resistant powers to become stronger and better.
CNR
The Opinions said to set up entrepreneurial bases in rural areas. Please tell us, what are the considerations for setting up such entrepreneurial bases?
Xu Nanping:
The CPC Central Committee and the State Council attach great importance to innovation and entrepreneurship, which needs a good platform. The platform is what we are all familiar with - makerspace.
We proposed setting up entrepreneurial bases in rural areas. So they really mean makerspaces in rural areas.
Why do we need to set up entrepreneurial bases? As everyone knows, we have been sending technical staff to work in rural areas for more than a decade. Colleges and scientific research institutions sent sci-tech commissioners to engage in public services in rural areas, with strong government support. The number of sci-tech commissioners sent to rural areas was 244,000 in 2011 and rose to 700,000 in 2015. They face a complicated and difficult situation in starting businesses in rural areas. As a government department, we hope to set up a better platform and help them lead farmers to a path of prosperity.
So simply speaking, it is a good platform to start businesses, which creates the environment for sci-tech commissioners to start businesses and make innovations.
We will offer them policy support, and also hope they can help more farmers get rich through this platform.
We hope to build more makerspaces in 2,000 counties, cities and districts across the country in order to provide a better environment and platform for sci-tech commissioners to start businesses. And we hope media friends will give us more support and suggestions.
Information Telegraph Agency of Russia-TASS:
How do you comment on the innovative entrepreneurship cooperation in rural areas between China and Russia? What aspects are more important in this field?
Xu Nanping:
This is a good question but not included in the topic of today’s policy briefing. When we are promoting the work of sci-tech commissioners, we also pay close attention to the international cooperation of the commissioners. We have just contacted the United Nations Development Program on this issue, and they spoke highly of our work. We will fully utilize the platform to strengthen cooperation with related countries. Currently, commissioners in provinces and autonomous regions such as Yunnan, Xinjiang, Ningxia and Guangxi have had some cooperation with neighboring countries. We will combine it with the Belt and Road strategy to enhance related works.
Regarding the sci-tech cooperation between China and Russia you just mentioned, I think there is great potential. You know that innovation-driven development is the re-integration of all kinds of innovation elements. If a company can integrate the resources in its country, it may become outstanding nationwide. If it can integrate the resources in the world, it may become transnational and outstanding in the world. Globalization of the economy requires enterprises to be globalized, which requires enterprises to re-integrate innovative resources in the world.
Every country has its unique advantages. China and Russia have many advantages to cooperate and a prosperous perspective for the future. I haven’t worked long at the Ministry of Science and Technology. When I worked in Jiangsu province, I led a team to visit Russia. Jiangsu province and Russia achieved great success in corporate cooperation.
Reuters:
My question is for Mr Xu. It has been said that China’s makerspaces are facing the danger of bubbles. Do you think similar platforms in rural areas will increase the risk, and are there any preventive measures?
Xu Nanping:
You have just asked a sharp question. Entrepreneurship itself is a kind of risk, and that is why related investment is called venture investment, but on the other hand, it could bring limitless opportunities for development. We cannot stand out in high technology industry if we choose not to take the challenge. High-tech industries in Europe lag those in the United States, but gap between their research level is not that big. Why? Margaret Thatcher, former prime minister of the United Kingdom, thought it was because venture investment in the US was far more established than their European counterparts, and that explains why the US owns so many high-tech companies with big influence in the world. Therefore, the so-called “bubble” is not real bubble, they are risks. We can only walk behind others if we cannot bear the risks, which is an issue of national strategy.
Now, although China has a very huge economic volume, it lacks guiding economies with competitiveness, which can only be cultivated based on high-tech sectors and talents. During the process, the possibility is that only one out of 10 cases will succeed, but it can yield exciting results. We must be aware of risks, but we have to do it, which is the demand of the development phase of our country.
Some people fail in starting their own business, but that doesn’t matter, and we should encourage them, especially young people, as failure is a kind of learning. It is not necessary that everyone will succeed when trying the first or second time, but many people realize their dreams after several times.
Xu Nanping:
I suggest media friends to make a tour on the spot. I was impressed after visiting entrepreneurship bases in four anti-poverty counties designated by the Ministry of Science and Technology, where sci-tech commissioners are helping farmers increasing incomes. In Zhashui county of Shaanxi province, a young man is running a flower company, and he told me that he has helped 170 households get out of poverty. He provides flower seeds to those farmers and teaches them how to plant before collecting the grown flowers and selling to the market. In Jia county, half of the incomes of local farmers are from planting jujube trees. There, a sci-tech commissioner is good at trimming jujube trees and the production is greatly increased in this way. Local people learned this method and earned money more quickly.
China Business Network:
Two questions for Mr Zhang.
First, the reform of the original industrial chain is mentioned in the document. Will the reform lead to a new monopoly?
Second, the SASAC has been cutting down the layers of company management. However, there are still nine levels in some companies. How does this happen? Thank you.
Zhang Xiwu:
First question. New monopoly will not happen. During the process of reconstruction and approval investigation, laws and regulations concerning anti-monopoly are strictly carried out. When enterprises are developing projects abroad, they will also receive strict local supervision.
Second question. Why does this happen? There are objective and subjective reasons, historical reasons, and some are caused by practical situations. Companies used to be a society. Now enterprises are asked to cancel their social function and solve historical problems, but they are not completely solved yet. We will continue to make efforts to solve this problem.
Xi Yanchun:
That’s all for today’s policy briefing. Thank you.
