Metal smelting furnace in Chinese steel mills. Photo: iStock

Four categories of state-owned enterprises (SOEs) should be the priorities for exiting the market, so as to make room for others, said Zhang Siping, the chairman of the Shenzhen Innovation and Development Institute, Caixin reported.

On the whole, SOEs that have lost their long-term competitive advantage, should step aside. Take Shenzhen as an example — outstanding private companies like Huawei and Tencent emerged, as SOEs exited the city’s tech sector.

Firstly, “zombie enterprises” in the over-capacities’ industries including coal, steel, construction materials and raw materials must expedite their exit.

Secondly, SOEs in the fierce competitive areas such as commerce, logistics, services, foreign trade and manufacturing.

Thirdly, SOEs not in line with the overall national economic development strategy or the direction of long-term development of SOEs.

And fourthly, risky SOEs, which cannot be handled by internal motivational mechanisms, such as small and medium-sized SOEs, that have already had bubbles.

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