By Ma Shuping, Research Team on “The Management of State-owned Capital Investment and Operation Companies”, Enterprise Research Institute, DRC

Research Report, No.167, 2020 (Total 5911) 2020-7-2

Abstract: The direct authorization mode refers to the fact that the government grants investors the obligations, while the indirect authorization mode points to the fact that the state-owned assets regulatory agencies empower investors the obligations. The two modes are major parts of the pilot trials of state-owned investment and operation companies. Since pilot reforms of the two types of companies were made, the central and local state-owned capital authorization and operation modes have mainly focused on indirect one. The two modes boast different pros and cons. In light of practices, the pros and cons of indirect authorization mode can be tangibly felt. For instance, the pros include rapid advancement of the pilot trials, less risks and the abilities of the enterprises can be brought into full play. However, this mode has led to the rise of entrust and surrogate relationships and inadequate authorization. In addition, cross-department capital layout adjustment cannot give full scope to its function. It is suggested that related departments accelerate the trials of the authorization modes, promote reforms of the modes in a classified manner, further reforms of the indirect authorization mode to achieve full authorization; select qualified state-owned investment and operation companies to launch the direct authorization mode. Besides, efforts need to be made to explore fund-based management mode of state-owned capital and establish scientific and effective evaluation systems for the two types of companies.

Keywords: state-owned capital investment and operation companies, direct authorization, indirect authorization, state-owned capital authorization, operation modes