All 101 firms controlled by the central government are to complete restructuring to become limited liability and joint stock companies by the end of 2017. Analysts said that converting the firms into modern corporations with a relatively clear ownership structures could pave the way for future equity transfers. Some 90% of the country’s state-owned enterprises (SOEs) have already been restructured. Committees will lead the restructuring process and prevent the loss of state assets, meaning that stakes cannot be sold at a discount. State enterprises were also told to adopt a market-oriented mindset. President Xi Jinping has made clear that overhauling the state sector is crucial to cutting the debt load and reshaping the economy, but the reform process continued to fall behind expectations.

State firms are estimated to account for around 70% of the country’s total non-financial debt, and many zombie companies are state-funded. “The key to reforming the state-owned enterprises is to break down market monopolies, to give up preferential policies and strictly supervise income,” said Sheng Hong, Director of the Unirule Institute of Economics and one of the most vocal critics of China’s state sector. “Otherwise, the so-called mixed ownership reform is just a slogan and it won’t have any real effect.” In the latest case, China Unicom is in talks to sell stakes to Alibaba Group and Tencent Technology. China’s state-owned companies reported steady profit growth in the first half of the year, totaling CNY1.41 trillion, up 24.3% year-on-year, according to the Ministry of Finance. Coal, petroleum and petrochemicals, and the transport sectors, posted strong annual growth while sectors such as electricity suffered a fall in profits. Some 48 central SOEs were on the Fortune Global 500 list this year, with State Grid and Sinopec second and third.