With the official release of the Plan for Further Deepening the Reform of State-Owned Capital and State-Owned Enterprises (2026-2029) (hereinafter referred to as the Plan), a new round of state-owned enterprise (SOE) reform has been fully initiated. Looking back at previous reform milestones, the three-year action plan for SOE reform (2020-2022) achieved its anticipated goals of "three notable results": notable progress in establishing a more mature and finalized modern enterprise system with Chinese characteristics and a state capital supervision system based on capital management; notable progress in optimizing and adjusting the layout and structure of the state-owned economy; and notable progress in enhancing the vitality and efficiency of SOEs. The subsequent deepening and enhancement initiative for SOE reform (2023-2025) was oriented towards serving national strategies, with a focus on improving core competitiveness and strengthening core functions, guiding state capital towards vital industries and key sectors. In contrast, this new round of reform places greater emphasis on the implementation of mechanisms and the reinforcement of core functions, driving a shift among SOEs from scale expansion to value creation. Tan Ying, a partner at EY's Greater China Industry Transformation Advisory Services, noted in an interview that at the current stage of development, SOEs need to achieve breakthroughs through resource integration, bolster momentum through innovation, and enhance efficiency through reform, transitioning from the "physical consolidation" of superficial asset mergers to the "chemical fusion" of organizational, industrial, and value chain synergy, exploring a high-quality development model suited to the modernization of SOEs.
From asset mergers to industrial integration, multiple industry insiders indicated that optimizing the economic layout is a standout feature of this Plan. Pang Xiaogang, Deputy Director of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), stated at a press conference held by the State Council Information Office that in 2026, efforts will be intensified to strengthen layout optimization, focusing on promoting the "three concentrations" of state capital: concentrating on vital industries and key sectors related to national security and the lifeline of the national economy, concentrating on public services, emergency response capabilities, and public welfare areas related to the national economy and people's livelihoods, and concentrating on forward-looking strategic emerging industries, vigorously advancing strategic and specialized restructuring as well as high-quality mergers and acquisitions. Zhang Jianlong, Director of the Science and Technology Innovation Bureau of SASAC, disclosed at the same press conference that since the start of the 14th Five-Year Plan period, central enterprises have cumulatively invested over 10 trillion yuan in strategic emerging industries, with the share of total investment rising from 22% at the beginning of the period to over 40%, achieving full coverage across nine strategic emerging industries. Li Jin, Chief Researcher at the China Enterprise Research Institute, stated that the core objective of previous reforms was to remove institutional constraints and activate market-oriented vitality, focusing on resolving historical issues such as rigid mechanisms. This Plan, however, is anchored in national strategic deployments and existing shortcomings of SOEs, shifting its main thrust towards strengthening core functions and enhancing core competitiveness.
EY's research team has found that many SOEs still face practical challenges such as ambiguous main business positioning, fragmented resource allocation, and insufficient industrial chain synergy, which aligns with the regulatory direction of pushing state capital towards key sectors under state capital supervision. In this context, Tan Ying believes that integration is a key measure to break through the current impasse. "Enterprises need to leverage their own resource endowments, target weak links in the industrial chain and emerging industry tracks, cultivate new growth drivers, and achieve a transformation from scale-driven to innovation-driven development. Enterprises must enhance their market-oriented capital operation capabilities, revitalizing existing assets while optimizing debt structures, guiding capital towards main businesses and strategic emerging industries to improve the efficiency of state capital utilization." At the same time, the evaluation criteria for restructuring and integration are also being adjusted. The Plan clarifies that M&A and restructuring should be oriented towards efficiency gains and value creation, correcting the previous approach that solely pursued scale expansion. In practice, the restructuring of China Shenhua serves as a landmark case of this shift. In December 2025, China Shenhua announced plans to acquire equity stakes in 12 core subsidiaries under China Energy Investment Corporation for 133.598 billion yuan, which received approval from the China Securities Regulatory Commission on February 12, 2026, marking the first A-share restructuring project to apply the simplified review procedure for M&A, using a payment model of "30% share issuance plus 70% cash." Upon completion of the transaction, China Shenhua's coal reserves would increase from 41.58 billion tons to 68.49 billion tons, with recoverable reserves reaching 34.5 billion tons, forming a closed loop across the entire "coal-power-chemicals-transportation" chain. Tan Ying further noted that in SOE restructuring and integration, enterprises need to clarify the division of rights and responsibilities, synchronously optimize governance structures, deepen reforms in the three systems (labor, personnel, and distribution), establish differentiated compensation mechanisms where positions adjust with performance and superior performance receives superior pay, fully unleashing talent vitality, and progressively advancing digital and intelligent transformation while building a penetrating intelligent risk control system.
Regarding performance assessment upgrades, market value and dividends are now incorporated into evaluation criteria. On the capital market front, M&A activity among state-controlled listed companies continues to rise. According to data from iFinD under Hithink RoyalFlush, as of July 7, 2026, a total of 817 M&A transactions involving state-controlled listed companies had occurred in the A-share market this year, with 181 completed and 636 ongoing. As the pace of restructuring accelerates, market attention on valuation reasonableness and the protection of minority shareholders' rights has been steadily increasing. The innovation in assessment mechanisms has drawn significant attention. In June 2026, SASAC, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, and the China Securities Regulatory Commission, issued detailed supporting rules for the performance assessment of central enterprises, incorporating three indicators: market value performance, shareholder dividends, and below-net-asset-value rectification, into the annual and tenure assessments of central enterprise leaders, with a combined weight of 20%-25%, and results directly linked to compensation and appointments. Tan Ying stated that as the new round of state capital and SOE reform enters the critical phase of systematic advancement and quality improvement, the focus of regulatory assessment has shifted from operational scale to value creation and core competitiveness cultivation. At this stage, enterprises need to break free from traditional path dependencies, utilize market-oriented means to optimize resource allocation, and achieve a leap from volume growth to quality and efficiency gains. Industry observers note that from hard indicators on revenue concentration of central enterprises to incorporating market value and dividends into assessments, the regulatory logic has expanded from simply managing business operations to managing capital returns. For SOE managers, beyond focusing on traditional operating statements, capital allocation efficiency and strategic contribution value are becoming important benchmarks for measuring corporate performance.
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