A state-owned enterprise of the People's Republic of China (Chinese: 国有企业) is a legal entity that undertakes commercial activities on behalf of an owner government.
[8][9] The state sector is a major part of China's economy, with SOEs accounting for approximately 25% of the national GDP as of 2020.
[10]: 6 When China's SOEs were first created, they served as instruments for carrying out national goals and providing social stability via the iron rice bowl.
[11] They continue to support stability through providing employment and maintaining low prices for key economic inputs.
[10] SOEs support China's industrial policy by channeling resources into sectors that the state regards as key, like artificial intelligence, nuclear power, and aerospace.
[16] China's SOEs are at the forefront of global seaport construction, and most new ports built by them are part of the Belt and Road Initiative.
[22] SOEs help stabilize public finance, including through allowing the government to use assets as collateral to issue debt or to sell shares to balance budgets.
[23] According to academic Wendy Leutert, China's SOEs, "...contribute to central and local governments revenues through dividends and taxes, support urban employment, keep key input prices low, channel capital towards targeted industries and technologies, support sub-national redistribution to poorer interior and western provinces, and aid the state's response to natural disasters, financial crises and social instability.
[28]: 95 Following the CCP victory in the Chinese Civil War, one of the party's early steps was to nationalize enterprises that the defeated Nationalists had controlled.
[30] During the Cultural Revolution, significant amounts of authority over national SOEs was transferred to local CCP cadres and People's Liberation Army officials.
[12]: 10 With the goal of boosting innovation and efficiency, more than half of China's largest SOEs had established technical development centers by 1993.
[34] Other major policies that were part of the 1997 reforms included management and employee buyouts and the inclusion of foreign strategic partners.
[43]: 80 The 2015 directive also increases the importance of party organizations within SOEs by requiring that the CCP committee secretary and the chair of the board must be the same person.
"[37] In Xi Jinping Thought, the historical importance of state-owned enterprises is highlighted:[37] [W]ithout the important material foundation that state-owned enterprises have laid for China's development over a long period of time, without the major innovations and key core technologies achieved by state-owned enterprises, and without state-owned enterprises' long-term commitment to a large number of social responsibilities, there would be no economic independence and national security for China, no continuous improvement in people's lives, and no socialist China standing tall in the East of the world.Xi Jinping Thought also emphasizes the role of SOEs as part of the dominant position of state ownership necessary for common prosperity.
[44] Lai Xiaomin, the former president of state-owned China Huarong Asset Management announced in 2015 that during the operation of China Huarong Asset Management, the embedded CCP committee will play a central role, and party members will play an exemplary role.
[45] As Jin et al. wrote in 2022,[46] The overarching principle of SOE reform is to firmly implement the Party’s leadership and the modern enterprise system.
[48][49][50] They are expected "to work together with grassroots organizations to collect intelligence and information, dissolve and/or eliminate security concerns at the budding stage," according to the People's Liberation Army Daily.