China to speed up Postal Service reform

China will speed up its efforts to reform the postal service and railway sectors this year as it continues to revamp the telecommunications, electricity and civil aviation industries, Premier Wen Jiabao said. The government will accelerate the overhaul of state-owned enterprises into stockholding companies, improve corporate governance and encourage enterprises to change the way they operate, When told the opening session of parliament. “A number of large, competitive companies or conglomerates that own proprietary intellectual property rights and name brands should emerge through reform and development,” he said. “We will vigorously develop a mixed ownership economy and gradually make the shareholding system the principal form of public ownership.” While the government has already made significant progress in opening up the telecommunication, electricity and aviation industries to foreign investment and greater competition over the last few years in line with its World Trade Organization commitments, it has made little headway in overhauling the postal service and railway system. The government is planning to spin off the savings arm of China Post, the country’s monopoly postal service, to form a postal savings bank, which can attract deposits but not make loans. The savings arm of China Post has been the postal service’s most lucrative business as the People’s Bank of China, the country’s central bank, paid preferential interest rates for post office deposits as compared with ordinary bank deposits. However, the PBoC has scrapped the preferential interest rate policy. China Post is reportedly also considering listing its six most profitable regional operations – Beijing, Shanghai, Jiangsu, Zhejiang, Fujian and Guangdong – on Hong Kong’s main board as a way of raising capital and reducing reliance on the government.