Limitations of the SASAC

The Chinese State-owned Assets Supervision and Administration Commission of the State Council (SASAC) was set up in June 2003.

It was designed to be the owner and investor of state-owned assets as well as the supervisory body of the Centrally-Administered Enterprises (CAEs) in China.

While the number of CAEs under SASAC is small and decreasing, from 196 in 2002 down to about 160 in 2006, these firms are considered the cornerstones of Chinese industry. (Sarah F. Tong, Reforming State-Owned Enterprises, in Interpreting China's Development, Ed. Wang Gungwu and John Wong, World Scientific Publishing, 2007).

The most important sectors under SASAC's control are capital-intensive large-scale industries including petroleum and refining, metallurgy and electricity.

But while efforts have been made to improve and strengthen the effectiveness of SASAC, it still does not have the authority to appoint the top managers of some CAEs, as that power belongs to the Communist Party.

"As a result, the appointees may not set as their top priorities the maximization of profit and the value of state assets," Tong wrote.

"SASAC is often powerless as many of the CAEs are very powerful and well-connected with some evolving from former government ministries. There is still a long way to go for SASAC to become an effective government body to exercise its designated right as the owner and investor of state-owned assets."