China’s government-owned firms will transfer parks, transport infrastructure and other “social functions” to local authorities by the end of this year, regulators said on Monday, part of the country’s ongoing efforts to slim down the state sector. The State-Owned Assets Supervision and Administration Commission (SASAC) said in a notice state-owned enterprises (SOEs) must transfer functions that “do not match the main direction of their business development” to local authorities. The country’s heavily indebted state-owned firms, most of which have been carved out of state bureaus, have been under pressure to ditch schools, hospitals, retirement homes, firefighting services and other “social functions” in order to cut costs and focus on their core businesses. The assets, which also include water supply and household sewage treatment infrastructure, as well as environmental and public health facilities, will be transferred to the government free of charge, the SASAC notice said. From 2018, no state firm will be obliged to cover the costs of “social functions” that have already been transferred to local governments, it added.
China’s state firms were obliged to provide lifelong employment and cradle-to-grave social welfare as part of its “iron rice bowl” system. But with thousands of companies tottering on the brink of bankruptcy in the 1990s, the government promised it would implement reforms in order to reduce their burden. The process has been complicated, however, with under-resourced local governments unable to afford to renovate run-down SOE-owned infrastructure or cover the health care, education and pensions of thousands of retired workers and their families, especially in “one-company towns” where the SOE was the major source of income.