The State-owned Assets Supervision and Administration Commission of the State Council recently issued a plan for reform of State-owned enterprises, which advances the establishment of central State-owned investment companies and companies operating State-owned capital that emphasize the circulation and appreciation of capital through diversified forms of operation.

At present there are 10 central SOEs including China Chengtong Development Group, China Reform Holdings Corporation, COFCO and China Poly Group Corporation that are to be the pilot State-owned capital investment and operating companies.

In the future there will be three kinds of central SOEs: industrial corporations, investment companies and operating companies.

The first two pilot central SOEs, China Chengtong and China Reform Holdings Corporation, have established two new State-owned funds, whose capital was 550 billion yuan ($80.75 billion) last year. The funds are for financing SOEs' structural adjustments as well as their transformation and upgrading.

The pilot programs for the other eight SOEs mainly focus on the reform of management and regulation. Capital operation and asset operation will be separated in the pilot SOEs, and "small headquarters, big industry" will be the reform tendency in the future.

The pilot program is expected to promote the optimal distribution of State-owned capital. In 2016, the total profit of the 10 pilot SOEs was 245 billion yuan, which was a 45 percent increase year-on-year and far more than the average profit level of SOEs.