Peng thinks that by getting listed in the securities market, some SOEs have experienced mixed ownership, but such a change extends just to form, while the management pattern has not yet changed.

At a forum on SOE reform held in Guangzhou, capital of south China's Guangdong Province, in December 2014, Gao Minghua, Director of the Research Center for Corporate Governance and Enterprises at Beijing Normal University, said only SOEs in the competitive industries are suitable for the mixed ownership reform, while non-profitable SOEs and those in industries of natural monopoly must be wholly state-owned or state-holding.

Chu suggested that headquarters of central SOEs be wholly state-owned. He also believes that the government must hold at least 51 percent of stakes in most of the SOEs.

According to Chen, in the governance of mixed ownership, the government must pay attention to the following aspects: excessively big state stakes must be separated and held by several shareholders; all the shareholders must perform their rights through shareholders' meeting and board of directors; the role and position of board of directors must be clearly defined; managers must be hired and dismissed by board of directors; and SOEs must obey state laws and be subject to supervision of government agencies.

In July 2014, the SASAC incorporated China National Building Materials Group Corp. and China National Pharmaceutical Group Corp. into a pilot program for mixed ownership. Song Zhiping, Chairman of China National Building Materials Group Corp., said mid- and long-term incentive in the management team and employee stock ownership should be introduced in enterprises of mixed ownership.

Classified supervision

"Accurate classification is an important step for SOE reform in the future," said Liu Jipeng, Director of the Capital Research Center at China University of Political Science and Law. However, disputes remain in classified supervision. In Shanghai, SOEs are divided into three categories: competitive, functional and public service-oriented. In Sichuan Province, SOEs are divided into two categories: competitive and functional. Most other provinces or municipalities divide SOEs similarly into three categories under different names.

Nationally, there are differing opinions on whether SOEs should be divided into two or three categories. Chen thinks state capital should be divided into two categories for different functions: policy-oriented functions to realize government goals and profit-oriented functions to protect people's wellbeing and provide public services. The proportion between the two categories must be readjusted in accordance with the real conditions.

Liu Xiaoxuan said the biggest problem for classified supervision is that the classification is not yet clear, and the categories are not clearly defined.

Peng said one of the reasons for the disputes in classified supervision is that an SOE may be involved in different businesses, making it difficult to be classified.

According to Peng, most central SOEs will fall into the competitive and functional categories, while enterprises such as China Grain Reserves Corp. and those for water and heat supplies fall into the public services category. The Central Government must conduct classified supervision and assessment and formulate different salary strategies in these SOEs.

Take salary strategy as an example. In the SOEs of competitive category, salaries will be decided in accordance with the business performance and appreciation of state-owned assets. In those of public service category, salaries will be decided in accordance with the fulfillment of public benefit indicators, while in those of functional category, both indicators will be considered when deciding salaries.