BEIJING, Feb. 21 -- China's largest oil refiner's plan to seek social and private capitalhighlighted the country's endeavors to forge a mixed ownership economy amid furtheropening-up expectations.
Sinopec, one of China's three oil giants, proposed on Wednesday to sell up to 30 percent ofits multi-billion dollar marketing arm to social and private investors.
The stake sale plan was the first move a stated-owned enterprise administered directly bythe central authorities (centrally administered SOEs) shared lucrative business withprivate investors.
Sinopec's marketing division operated 30,532 gas stations across the country as of the endof 2013, and fuel sales stood at 165 million tonnes last year.
China's important sectors are largely dominated by 112 centrally administered SOEs, butthe public complain about low efficiency and high welfare mainly resulted from monopoly.
To unleash the vigor of a market economy, the Communist Party of China vowed lastNovember to actively promote mixed ownership and raise non-state share in the economy.
"Sinopec's move is a solid reflection of the central authorities' determination," said ZhangChunxiao, an expert with the State-owned Assets Supervision and AdministrationCommission (SASAC).
Li Jin, chief researcher of China Enterprise Research Institute, called the plan "a big steptaken by centrally administered SOEs in breaking monopoly and developing mixedownership".
MIX-OWNERSHIP BENEFITS BOTH
It is not clear whether Sinopec would establish a partnership by setting up a joint ventureor just absorbing money like through an IPO and put it in already built business.
Both ways are possible, said Xu Baoli, a senior researcher with SASAC.
"Private investors may bring in industry expertise to run the marketing business in a moreprofessional way, and help better SOE governance," said Xu.
Sinopec's gas stations has issued millions of fuel cards which record part of the holders'buying preference. The refiner, along with future partners like Alibaba or Tencent, coulddig gold in products designed based on big data extracted from these cards.
Mixed ownership will also create business opportunities for private companies. XinjiangHaoyuan Natual Gas Co. Ltd, told Xinhua that it will actively seek cooperations with SOEsas the latter usually have huge consumer bases.
Sinopec shares soared to hit a 10-percent increase limit, shortly after the start of Thursdaytrading. Other oil companies also enjoyed big gains.
FURTHER OPENING-UPS EXPECTED
Although business insiders and experts hailed Sinopec's proposal, Lin Boqiang, an energyexpert with Xiamen University, believed the move is not bold enough.
"Many private investors are longing for the access to oil exploration business, which will bea strong signal of an overall reform," Lin told Xinhua.
"China keeps exploration rights under tight control as rampant drilling by privatecompanies may lead to serious ecological damages," said Zhou Fangsheng, an expert onSOE issues, yet adding that China could consider easing crude oil import restrictions.
"The 30-percent stake cap may be eased and private shares in once-monopolized sectorsmay be rising in the future," said Li Jin.
State-owned capital in sectors like oil, power, automobile and telecommunications mayretreat to a just-above-half level, and the percentage may be even smaller in emerging andhigh-tech industries, according to Zhang.
"The focus of SOE reforms this year will likely be forging mixed ownership," Li predicted.
Source: Xinhua
