SASAC to crack down on monopolistic SOEs

China's supervisor of State-owned enterprises will tighten its oversight of SOEs, a senior government official said.

The State-owned Assets Supervision and Administration Commission (SASAC) will take oversight measures in a range of aspects such as price, quality of service, cost control, income distribution and resource allocation, aiming to increase corporate transparency and to prevent companies from taking advantage of their dominant market status, Shao Ning, deputy director of SASAC, said during a conference held in Beijing yesterday.

Shao also said that SOEs in sectors such as petrol, electricity and telecommunications are the most likely to be identified as monopolies. "Some of them are the only player in the industry," he noted.

"I understand SASAC's move to address public complaints by strengthening its supervision," Sun Lijian, vice dean of the School of Economics of Fudan University, told the Global Times yesterday.

"But there are two questions that need to be answered: Who will supervise the supervisors to ensure their neutrality? And can the feedback be conveyed to the watchdog without delays?" said Sun.

"So far, the answers to these questions are not optimistic at all," Sun noted.

The announcement from SASAC came after two telecommunication giants - China Telecom and China Unicom - were placed under investigation by the National Development and Reform Commission (NDRC).

In the country's first ever anti-monopoly case against SOEs, the NDRC said the two companies enjoyed disproportionate market share in the Internet access business, as well as charging excessively high fees and offering inadequate service quality.

China Telecom posted a notice on its website last week, in which it said it would do all it could to conform with NDRC requirements, but the company still has a long way to go to achieve this, Xin Haiguang, an IT industry commentator, told the Global Times yesterday.

"The notice did not mention anything about a price cut in the short term, which is an important issue," said Xin.

The NDRC demanded that China Telecom come up with a detailed plan within this week.

"In China, big SOEs are overly concentrated in the upstream of industry chains, such as resources and energy, where they are free from competition and can enjoy various privileges," Sun of Fudan University told the Global Times.

"In contrast, small and medium-sized enterprises are exposed to fierce competition in the downstream," Sun said.