The volume of R&D investment will become an important tool to assess the performance of the senior managers of China's 167 central state-owned enterprises (SOEs).

"R&D and innovation in the central SOEs are largely hindered by insufficient spending. We should improve the assessment system and give prominence to R&D investment," said Li Rongrong, chairman of the State-owned Assets Supervision and Administration Commission (SASAC).

Part of the R&D investment can be regarded as profits on the basis that the scope of investment has been standardized, Li said at the first ever Work Conference on SOE Science and Technology, which closed on Sunday.

Currently, R&D investment of the central SOEs makes up 1.5 percent of their sales income, compared to the 5 percent in large companies in developed nations. Besides, the spending by China's industrial enterprises on technology development is only 6 percent of that of technology import, while the ratio in the South Korea and Japan reaches 500 to 800 percent.

"Technological reserves in the central SOEs should reach 15 years at least, and new products should account for at least 30 percent of their total products," Li urged.

This is not a rigorous requirement compared with the 50-year technological reserve of some global giants, but a difficult one under the current situation that most SOEs have to import technologies for their present needs, said Wang Xiaoqi, the SASAC official in charge of SOE innovation.

Wang announced on Sunday that the central government has designated a fourth function to the SASAC, the function to promote SOE innovation. Formerly, the SASAC possessed three major functions: promoting SOE reform, state-owned economy redistribution and increasing state-owned assets.

The assessment of SOE managers should attach greater importance to R&D investment, Wang stressed.

At present, senior SOE managers are assessed by four indexes, including two basic indexes of profit and net yield of assets, and two classified indexes. The classified indexes are chosen from more than 20 based on the features of each SOE.
As one of the classified indexes, R&D investment currently covers all the central SOEs in the science and technological sector and about half of the central SOEs in the industrial sector.

Whether making R&D investment a basic index to cover all the central SOEs, a SASAC official in charge of SOE assessment said the relevant measures will soon come out, but the index is sure to be "hardened". That is, to replace the current statistical standard of the index by fiscal standards.

The central SOEs are the pillars of China's economy. They produce almost all of the nation's crude oil, gas and ethene, offer all the basic telecommunication services, generate 43 percent of the power, and manufacture 47.5 percent of the vehicles and 60 percent of high-quality steel.

Among the 14 key research projects deployed by the nation for the next five years, 12 are directly participated by the central SOEs.

Editor: Yan