How state firms are assessed is shifting. Rules are in draft to clarify the mission of each central SOE; more detailed value-added accounting will follow, reports the Economic Observer.
Three classifications (commercial, strategic and public-interest) were introduced for central SOEs in 2015–17, giving SASAC (State Assets Supervision and Administration Commission) a basis to assess each by its peers. The goal was fit-for-purpose supervision, and for its time, the framework delivered it.
A parallel reform to state capital management has moved capital operation firms beyond the pilot stage. These are state holding vehicles that, Singapore-style, manage portfolios of SOEs rather than operating them directly. This provides Beijing with an additional tool to adjust the layout of the state sector.
The current framework struggles to keep pace. Still held to a commercial standard, Central SOEs must preserve and grow state assets while being assigned missions that deliberately sacrifice short-term returns. That tension is hardest to manage as firms push further into strategic emerging industries, data assets and long-cycle security functions under the 15th 5-year plan.
central SOE classification (2017)
‘five values’ widened the scorecard
The 2024 ‘five values’ agenda was the next major step. At a January 2024 meeting of central enterprise heads, SASAC redefined five indicators
value added
functional value
economic value added
share of revenue and value added from strategic emerging industries
brand value
The formal meaning of performance now extends beyond scale and profit. Central SOEs were expected to log their value creation, strategic contribution, upgrading and longer-term competitiveness. The contribution they make to fulfilling their strategic mission, not just their financial returns, should take ‘priority position’, insisted SASAC chair Zhang Yuzhuo 张玉卓.
Widening the scorecard, the ‘five values’ agenda left unsettled the questions of how different firms should be categorised, and how those categories should shape accounting and assessment.
By January 2026, the target had moved yet again. On the cards now are clearer functional positioning, stronger strategic mission evaluation and value-added accounting, SASAC Enterprise Reform Bureau director Lin Qingmiao 林庆苗 told a State Council Information Office briefing on 28 January. Value-added accounting measures contribution to the economy above the cost of inputs, rather than what firms retain as profit.
what the scorecard misses
The old framework’s devils remain visible in the detail. Existing categories remain imprecise. Functions and official assessment criteria still overlap across commercial and public-interest firms, wrote SASAC Research Centre analyst Hu Chi 胡迟 on 25 March. Certain public-interest firms have become too profit-driven; some commercial firms still carry too many non-operating tasks.
Firm-level indicators already make up 76 percent of 2025 annual assessments under ‘one enterprise, one policy’ scoring. The machinery has been individualised; the upstream question, of each firm’s actual mission, has not.
CETC, the central SOE at the core of PRC defence electronics and strategic digital infrastructure, shows the strain. Its semiconductor, sensor, microsystem and IC platforms support national projects from BeiDou and space missions to 5G and NEVs. By a narrow commercial scorecard, long-cycle investment in those areas can look like a drag. Given the policy imperative of building technology self-reliance, it is exactly what the firm is supposed to do. The current framework has no clear way to log that achievement.
State Grid faces a different version of the strain. As a commercial category two firm with heavy public-service obligations, it must absorb renewable power at scale, maintain grid stability in remote areas and keep electricity affordable. None of those tasks maximises returns. It has committed C¥4 tn in grid investment over the 15th 5-year plan. Holding it to the same preservation-of-assets standard as a commercial firm creates incentives that pull against its actual mission.
shifting SOE scorecard
a new ledger
The reported measure would put functional definitions on a firmer regulatory footing than the older guidance-and-plan framework; connect broad categories more directly to strategic mission evaluation; bridge function definition and value-added accounting; and support differentiated assessment across commercial, strategic and public-service firms.
Practical implications run deeper than classification. New rules could widen the accounting range beyond the profit statement, bring strategic value and social benefit into view alongside financial returns, and strip out gains inflated by internal group transactions. More detailed value-added data could give assessment a harder basis.
That would affect both the scorecard and investment decisions. Paying less attention to revenue rankings and total profits, group managers may pay more to the net value added by their firms and its composition. Projects may be judged less by internal rate of return and more by their value-added contribution, not least in strategic emerging industries. Accounting would move closer to the centre of resource allocation.
beyond the ledger
Tougher issues await. Easy to invoke, strategic value is hard to price. In principle, self-evident public-interest obligations are much harder to compensate consistently. A looser system risks letting weak performers dress up poor commercial results as strategic necessity, escaping accountability in the process. A tighter one could penalise firms whose missions genuinely require long cycles, heavy assets or lower direct returns.
Functional definition is the emerging organising question for the next phase of SOE reform, with ‘one enterprise, one policy’ assessment its likely outcome, argues China Enterprise Research Institute chief researcher Li Jin 李锦. Vice Premier Zhang Guoqing 张国清 echoed this on 8 April, calling for stronger core functions and a greater strategic support role for state firms.
This points to a broader shift in how the economy is governed. Market rationality is being applied selectively. State firms are judged against function as much as profit. Private firms face tighter rules on competition and conduct. International firms operate within a more explicitly conditioned opening. Becoming more segmented, the state economy is ever more explicit about where varying rules apply.
SOE reform timeline
the referees
Lin Qingmiao 林庆苗 | SASAC Enterprise Reform Bureau director general
Lin’s significance is in policy sequencing. At the 28 January State Council Information Office briefing, he set out four reform priorities, the third being the most pointed: ‘further clarify the functional positioning of different types of SOEs, strengthen strategic mission evaluation and carry out state-owned value-added accounting.’ Those three moves outline the supervisory logic behind the draft rules and suggest Beijing deems classification, assessment and accounting a single pipeline rather than separate workstreams.
A second data point from the same briefing: firm-level indicators already account for 76 percent of 2025 annual assessments under ‘one enterprise, one policy’ scoring. The machinery has been individualised; the upstream question of what each firm is actually for has not.
A career SASAC official, Lin is director general of the Enterprise Reform Bureau and the spokesperson the commission regularly puts forward at State Council Information Office briefings on SOE reform.
Li Jin 李锦 | China Enterprise Research Institute chief researcher
Li has consistently treated functional and mission reform as the primary task of the current round, with institutional reform as secondary. That framing places function definition at the centre of the agenda; ‘one enterprise, one policy’ assessment is its natural outcome. In a March 2026 commentary, Li forecast that strategic restructuring and specialised consolidation would speed up, with second-tier subsidiaries as the main site of reorganisation. His analysis points in the same direction as the draft rules: towards sharper alignment between firm type, mission and policy purpose.
A senior Xinhua correspondent for three decades, Li moved into research after a stint as editor-in-chief of China Enterprise News. He is vice-chair of the China Enterprise Reform and Development Research Association and chief researcher at the China Enterprise Research Institute. One of the most widely quoted independent commentators on SOE reform, his analysis draws on direct enterprise reporting across every phase of reform since 1978.
Zhou Lisha 周丽莎 | Tsinghua University Modern SOE Institute director
Zhou is useful for reading the scorecard shift as part of a wider tightening of state capital governance. In recent commentary on SASAC’s new Overseas State Assets Bureau, she argues that rising geopolitical, compliance and asset-security risks have exposed the limits of an approval-heavy oversight model, making a dedicated overseas bureau a functional necessity. Her view adds a risk-control angle: Beijing is not only redefining what SOEs are for, but also building more specialised institutions to supervise where state capital goes and how it is protected.
Zhou Lisha is the director of Tsinghua University Modern SOE Institute. Her recent commentary focuses on SOE reform, overseas state assets, strategic restructuring and state capital layout.
context
08 Apr 2026: Vice Premier Zhang Guoqing 张国清 calls for stronger core functions, greater focus on strategic missions and deeper SOE reform
30 Mar 2026: Economic Observer reports that rules to define the purpose of each central SOE are in draft, with follow-up rules on value-added accounting expected
25 Mar 2026: SASAC Research Centre researcher Hu Chi 胡迟 notes that existing classification reform remains too imprecise, with overlapping functions and assessment indicators across firm categories
28 Jan 2026: SASAC Enterprise Reform Bureau director Lin Qingmiao 林庆苗 sets out clearer functional positioning, stronger mission evaluation and value-added accounting as the next step in SOE reform
25 Jul 2025: SASAC Research Centre frames the building of a system to evaluate how SOEs fulfil strategic missions as a key institutional task
06 Jun 2025: SASAC formalises a three-tier planning system for central SOEs
30 May 2025: A central Party-state opinion calls for better SOE function definition, optimised differentiated supervision and greater focus on intrinsic and long-term value
05 Jan 2024: SASAC raises the ‘five values’ agenda, expanding how officials are assessed beyond scale and profit to value added, function and strategic contribution
22 Dec 2022: SASAC moves state-owned capital operation companies beyond the pilot stage, strengthening their role in adjusting SOE layout and capital flows
26 Sep 2016: SASAC launches differentiated assessment for central SOEs based on function, following classification reform
29 Dec 2015: Guiding opinions introduce function-based classification, dividing SOEs into commercial and public-interest categories
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