At least half of the key state-owned enterprises (SOEs) directly controlled by the central government will undergo restructuring and the number of the enterprises will drastically shrink, a Beijing-based magazine reported.

According to the China News Week, Chinese government has set a final target to cut the number of central SOEs to 30-40 from 167, less than the number of 80-100 speculated previously.

The restructuring of central SOEs will enter an essential phase this year. "China has never seen such scale and extent of the restructuring before," a senior official from the State-owned Assets Supervision and Administration Commission (SASAC) said.

The report said the restructuring was inevitable, especially in such industries as real estate, trade, tourism, and chemicals, which were not dominated by central SOEs. Director of the SASAC Li Rongrong has set a deadline of October 2007 for those enterprises to launch the restructuring.

The ranking of the indusrty will be the key element to decide which enterprise will conduct the restructuring. The enterprises will be taken over unless ranking among the top three in the industry. "If you could not find 'in-laws', I will seek one for you," said Li.

With the approval of SASAC, China National Cereals, Oils and Foodstuff Corp (COFCO), the country's largest foodstuffs trader, merged with China Grains and Oils Group Corp (CGOG) , on March 17. After the "transfer," CGOG became a subsidiary company of COFCO.

The report said SASAC had a detailed arrangement guidelining the restructuring. According to the new policy, a management stimulant mechanism will be explicated. SASAC will also establish a fund, by acquiring the profits from the central SOEs, to pay fees for the M&A (Merger and Acquisition) and restructuring of some central SOEs on a selective basis.
 
Editor: Yan