Party Leadership Is the Unique Strength of SOEs

Xi Jinping: The Governance of China II Updated: 2021-12-24

Party Leadership Is the Unique Strength of SOEs*

October 10, 2016

We should strengthen and improve the Party's leadership of SOEs and the role it plays in these enterprises, with a goal of making them the most reliable force of the Party and the country and a major force in implementing the decisions and plans of the CPC Central Committee. These include implementing the new development concepts, carrying out further all-round reform, implementing the going-global strategy and the Belt and Road Initiative, increasing the national strength, promoting economic and social development, and ensuring and improving the wellbeing of the people. We should implement policies that preserve and increase the value of state assets, improve the competitiveness of the state-owned sector of the economy, and expand state-owned capital. We must also promote reform of SOEs, improve their management, strengthen supervision over state assets, and make consistent efforts to help SOEs become bigger, stronger, and better.

SOEs serve as a material and political foundation for socialism with Chinese characteristics. They are a pillar supporting the Party in the governance and rejuvenation of China. Since the PRC was founded in 1949, and especially since reform and opening up began in 1978, SOEs have made remarkable achievements in their development. They have made a historic contribution to China's economic and social development, scientific and technological progress, national defense, and public wellbeing.

Following the Party's leadership and strengthening the Party organization are a great tradition of the SOEs, their root and soul, and a unique strength.

The general requirements for SOEs in the current era are as follows: 

– upholding the principle of the Party supervising its own conduct with strict discipline; resolving problems concerning the weakening and marginalization of the Party and its leadership; never wavering in upholding the Party's leadership of SOEs; Party organizations playing the role of leadership and political core; guaranteeing the implementation of policies and major plans of the Party and the country;

– serving production and operation; improving SOEs' performance and competitiveness, and maintaining and increasing the value of state assets; enabling evaluation of the work and effectiveness of Party organizations according to reform and development results;

– insisting upon Party organizations' leadership and examination over the appointment of SOE leaders; focusing on the cultivation of high-caliber SOE leaders; and

– building strong grassroots Party branches; making sure the Party develops in tandem with the enterprise and Party branches act as a strong organizational guarantee in making SOEs bigger, stronger, and better.

We must uphold the important political principle of the Party's leadership over SOEs. A modern corporate system is the goal of reform. SOEs' modern corporate system with Chinese features is unique because it incorporates the Party's leadership into all aspects of their corporate governance and Party organizations into the corporate governance structure. It also clarifies and ensures the legal status of Party organizations in the legal person corporate governance system, with Party organizations and personnel being in place, clear responsibilities, and strict supervision.

The Party's leadership of SOEs consists of political, ideological and organizational guidance, and the Party organizations in SOEs work as political core leadership, steering the correct direction, controlling the overall situation, and guaranteeing the implementation of decisions. We should clarify, specify, and institutionalize the Party organizations' roles and responsibilities in decision-making, implementation and oversight. We should adroitly handle the relationship between Party organizations and other management, clearly define the boundaries of rights and responsibilities, and form a management mechanism which is seamlessly cooperative, checked, and balanced, and where each fulfills its own function and takes on its own responsibility.

The Party and the people place state assets under the control of business leaders, which is a great trust. We must conduct the education of SOE leaders on engagement with the Party, on principles, and on risks. We must be strict and impartial in political discipline and rules, and guide them to improve their political awareness, enhance their commitment to the Party, and keep vigilantly attentive. We should strengthen supervision of key targets, key positions and important personnel, especially leadership. We should improve the system for overseeing decision-making on major issues, important appointments and removals, major projects, and the use of large amounts of money. We should integrate daily management with supervisory scrutiny.

Fully relying on the working class is inherent to the Party's leadership of SOEs. We should improve the democratic management system with the workers congress as the basic element, providing open access to the affairs and business of enterprises, ensuring the employees' right to stay informed about, participate in, and express views on and oversee their enterprise's affairs, while arousing the enthusiasm, initiative and creativity of the workforce. Enterprises should listen to the views of workers in major decision-making, and deliberate at workers congresses over major issues concerning the vital interests of the workers. We must adhere to and improve the system that employees serve as board directors and board supervisors, and encourage employees to participate in corporate governance.

The leadership of SOEs is the backbone of the Party in the economic sector and an important source of professional talent in national governance. They shoulder the responsibility of managing and preserving state assets and ensuring that they appreciate in value. These leaders must be loyal to the Party, and be bold and innovative in work. They must manage their enterprises well and produce results. They must remain clean and honest. They should enhance their political integrity, have a broad view, follow the core leadership of the CPC, and act in accordance with the Party's policies. They should also identify themselves with the Party, care for the Party, and defend the Party in every aspect of business operations and management. Faced with increasingly fierce domestic and international market competition, the leadership of SOEs should rise to the challenges, be innovative, and lead the employees in breaking new ground.

We must adhere to the principle that the Party supervises the work of personnel management and has the right of appointment and removal of leadership and key staff, so that those who are politically qualified, competent and upright are selected. SOE leaders should work on the frontline with the workers, and those of excellent quality who have good experience are to be promoted to the leadership. We should strictly manage and care for the leadership, adopt incentive mechanisms, and leave them enough room to demonstrate their capability. We should publicize the successes and contribution of outstanding SOE leaders, and foster a social atmosphere that respects the value of entrepreneurs, encourages their creativity, and lets them play their role.

The strict governance of the Party should be applied to SOEs, branch organizations, ordinary Party members, and the basic enterprise system. We should ensure that new SOEs have Party organizations established the moment they are founded, and adjusted along with the development of enterprise. We should carry out the routine education of Party members. Enterprise Party committees should organize regular branch meetings, branch committee meetings, group meetings, and Party lectures to emphasize commitment to the Party. Party branches should be the core that draws together the workers and staff, the school that educates Party members, and the fighting force for solving problems. We must take political philosophical education as a regular and basic task of Party organizations. Education in political philosophy should be combined with resolving concrete problems; it should be reasoned and practical, and we should do our best to win the hearts of the employees.

Party committees at all levels should develop the role of the Party in SOEs in accordance with the principle of the Party supervising its own conduct with strict discipline. Local Party committees at all levels should put Party development in SOEs on their agenda, and Party committee (Party leadership group) in every enterprise should fulfill its own responsibilities as the main actor. We must advocate integrity and fight against corruption in SOEs, focusing on Party discipline and rules, and persevere in implementing the Party Central Committee's Eight Rules on improving Party and government conduct. We will rectify problems identified during discipline inspections without fail, and investigate and punish any people involved in embezzlement or abuse of state assets.

* Main points of the speech at the National Conference on Party Development in SOEs.

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