The State-owned Assets Supervision and Administration Commission recently announced a stock ownership plan for eligible employees in some State-owned enterprises.

The move, which aims to enhance employees' creativity, enthusiasm and sense of belonging, signals further deepening of SOE reform.

By achieving the sharing of interests and risks, the plan is expected to further increase the efficiency and competitiveness of SOEs.

But it is one of the most sensitive and complicated issues of SOE reform because it is related to not only the SOEs' incentive mechanism, but also the value of these State-owned assets. Some people worry inappropriate implementation of this reform may result in losses for those State-owned enterprises.

The plan proposes to pilot employees' stock ownership in a few SOEs first, and they will not include those central SOEs above the second level and top level provincial SOEs. The employees who will be eligible to purchase stock will be scientific research and management personnel that directly influence SOEs' performance.

These stipulations are not intended to impede the reform, but to ensure its successful implementation.

In addition, to improve the performance of SOEs in the long run reforms should focus on establishing a modern enterprise system and increasing enterprises' market competitiveness.