Mixed ownership means that an enterprise is set up by investors of different types. Improving property rights protection will guarantee that all kinds of ownerships have equal rights to participate in a mixed-ownership entity.

The Decision on Major Issues Concerning Comprehensively Deepening Reforms says that the property rights of the public sector are inviolable, as are the property rights of the non-public sector.

Li said improving the property rights protection system required ensuring state-owned assets will not lose control over important sectors, such as the military and grain reserves.

Key sector

Energy is the sector with the highest concentration of state-owned capital. Among the three major energy industries—power, oil and gas as well as coal—the power industry has the lowest level of market performance, followed by oil and gas.

Wang Jian, Secretary General of the China Society of Macroeconomics, said the high state capital concentration in the energy sector is not because energy enterprises are highly competitive, but because of strict government control and monopoly of supplies, barring private capital.

Wang said to develop a mixed economy in the energy sector, China must first break administrative monopolies, clear the obstacles to private capital, set up an energy market for open competition, develop diversified financing channels and break financing bottlenecks.

If the government does not formulate more detailed implementation rules, allowing private capital into the energy sector will be nothing more than empty words, said Wang.

For direct pricing and control by the government over a long period, prices of refined oil, natural gas and power are not decided by costs and product quality, but by the government's struggle with different energy industries and different energy consumers. Therefore, boosting market-oriented reform of energy pricing becomes the essential factor deciding private capital access to the energy sector.

According to Wang, China should enhance financial support for private investors in the energy sector, because in this capital-intensive sector, most private companies will be unable to afford the high input and costs of extraction and production. Without support from financial institutions, it will be difficult to develop a mixed economy in the energy sector.

Breaking monopolies

China's SOEs are divided into three categories: state monopoly enterprises for public interest, state monopoly enterprises for moderate business purposes and competitive SOEs.

Wang said in China, some industries that should be dominated by private companies are dominated by SOEs, such as the telecom industry, but in some industries, such as public transport and healthcare, which should not be dominated by private companies, state capital is pulling out, and many public service SOEs are now profit-oriented.

Gao Minghua, Vice Dean of the School of Economics and Business Administration of Beijing Normal University, said the development of a mixed economy can start from competitive SOEs. The government should no longer support such SOEs and make them compete with private companies in a fair environment.

"From the experience of developed economies, in countries with a mature market economy, most SOEs are concentrated in sectors for public interest and few are in competitive industries," said Gao.

Email us at: lanxinzhen@bjreview.com

Figures on SOEs and Private Sectors

Net assets of China's SOEs stood at 5.03 trillion yuan ($819.22 billion) in 1998. By August 2013, net assets of SOEs (excluding financial enterprises) had totaled 30.4 trillion yuan ($4.95 trillion).

In 1995, there were 655,000 private enterprises, hiring 9.56 million people, with registered capital totaling 262.1 billion yuan ($42.69 billion). By the end of 2012, there were 10.86 million private enterprises, hiring more than 120 million people and registered capital surpassing 31 trillion yuan ($5.05 trillion).

(Compiled by Beijing Review)