China releases guideline to improve modern corporate systems with Chinese features

In an ongoing push to make Chinese enterprises "more dynamic, resilient and competitive," the Chinese authorities on Monday made public a guideline on refining the country's modern corporate system with distinctive Chinese features.

The guideline, released by the general offices of the Communist Party of China Central Committee and the State Council, proposed 19 specific measures that focus on reinforcing the Party's leadership, optimizing corporate governance structure and scientific management, and improving incentive mechanisms for innovation.

The document seeks to empower enterprise development with institutional innovation, further unleashing the vitality of micro entities and making China's modern enterprises more dynamic, resilient and competitive, according to a question and answer section on the website of the National Development and Reform Commission, the country's top economic planner.

China expects to establish a modern corporate system with distinctive Chinese features in eligible enterprises in about five years so that they can fully play their roles in promoting innovation, supporting industrial upgrades and fulfilling their social responsibilities, the guideline said.

By 2035, China shall see more refined modern corporate systems with distinctive Chinese features, which would significantly boost the global competitiveness of Chinese enterprises and lay a solid foundation for building world-class companies.

The document devoted a special chapter to enhancing incentive mechanisms for innovation within enterprises, outlining specific measures to innovate organizational structures, optimize resource allocation efficiency, and refine the design of incentive systems.

It also called for efforts to leverage the role of capital markets in enhancing corporate governance. Listed companies are encouraged to bring in institutional investors holding over 5 percent stakes as active shareholders. Moreover, the information disclosure system in the governance of listed companies shall be improved to promote sound decision-making.

(Cover: A view of Shenzhen, south China's Guangdong Province, November 24, 2023. /VCG)