China is unlikely to rely on private capital to revive state-owned enterprises

China's efforts to revitalize state-owned enterprises will accelerate at this year. Bankers and investors expect more spin-off and sale of assets after the Nineteenth Party in October.

But sources familiar with China's plans have pointed out that private capital may only play a limited role in it, although the authorities have been claiming to be a key player in reforming state-owned enterprises.

Sources said the Chinese government may rely on China Life (601628.SS) and China CITIC Group and other well-funded state-owned enterprises to rescue those troubled large state-owned enterprises.

They mentioned that China Life last month participated in China Unicom (0762.HK) 12 billion US dollars financing.

Private capital participation is limited, will be questioned the depth of China's state-owned enterprise reform. China hopes to accelerate this reform to achieve faster economic growth targets and to cope with corporate debt burdens.

"The current model allows winners, those who do better, to have some of the poorly performing companies," said Alicia Garcia-Herrero, Asia Pacific chief analyst at Natixis. "In other words, Large - scale consolidation of state - owned enterprises' profit and loss.