State-owned assets operation and management group China Chengtong Holdings Group Ltd is planning on raising funding to help speed structural reform of China's state-owned enterprises (SOEs), the group's chairman Ma Zhengwu said in Beijing on Thursday.
Ma did not an exact figure for the fund, which is meant to help with finances for SOEs to fund their acquisitions and mergers both in domestic and international markets.
China's State-owned Assets Supervision and Administration Commission selected Chengtong as one of the two state-owned enterprises - the other being China Reform Holdings Co Ltd - to pilot SOE reforms initiated by the central government in February.
The company said in a statement on Thursday that the funding will be used to support SOEs "upgrade their industrial layout, optimize capital allocation, investment of state-owned capital, mergers and reorganization, as well as promote their overseas operations".
Chengtong has previously reorganized six SOEs, 14 SOE subsidiaries, and 11 defense industry companies in the past decade, as well as managed bankruptcy liquidations for 656 companies with a total debt of 80 billion yuan ($12 billion).
The group also made headlines in the Chinese market recently when it assisted the financially crippled China Railway Materials Co Ltd in repaying its debt of 6.8 billion yuan between January and August.
Ma said that overcapacity has become a major problem for both the public and private sectors.
"The difference was that private enterprises were more market-orientated, reacting to change through downsizing, shutdowns or bankruptcy, when they were unable to generate a profit," Ma told the China Daily newspaper. "Unsuccessful clearance of overcapacity poses a major threat to China's economic structure."
Ma added that Beijing is now turning towards SOE mergers to create more "global powerhouses" and steer clear of competition, as well as restructuring redundant industries to aid in supply-side reforms in the country.
Chengtong is currently affiliated with 13 national enterprises including China National Materials Storage and Transportation Co, China Paper Investment Co and China Commerce Group, as well as 13 subsidiaries in the Chinese mainland, Hong Kong, Russia, and the United Kingdom.