Peng said SOEs should establish a modern compensation system for managers that reflects performance, risk and responsibility. Doing so will help companies become more competitive in the international market.

"SOE reform is facing many obstacles and problems that need to be solved through practice and experience," he said. "Enterprises should be the drivers of change."

Peng also said that the government will streamline or abandon some approval processes and yield those rights to the companies in the future. Details are still under discussion, he said.

The fourth part of the trial involves unspecified changes to safeguard against corruption. The SASAC will send discipline inspection teams to two or three companies that were not identified.

Investors reacted positively to the announcement. Cofco Tunhe Co rose 3.3 percent to 5.30 yuan per share on the Shanghai Stock Exchange, and Cofco Biochemical Co's shares soared 8.9 percent to 4.66 yuan on the Shenzhen Stock Exchange.

The Shanghai index advanced 0.2 percent, while the index in Shenzhen was up 0.35 percent.

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