Editor's note: Creating a better business environment and improving service for foreign and domestic enterpises has become a hot topic this year as China prepares to publish its 12th Five-Year Plan. China.org.cn will interview distinguished economics, government officials, entrepreneurs and scholars to bring you the information you need to understand this complex issue.

SOE overseer: SOEs need to modernize

The head of China Reform Holdings, the state-owned corporation set up in December to integrate and restructure China's state-owned corporations, wants state-run companies to operate under modern business models.

Only corporations with a modern business model can survive, Xie Qihua told China's lawmakers and advisers at the annual legislative conferences. She said new market challenges mean companies need to deepen reform measures.

China's state-owned corporations have many deep-seated problems left over from its Soviet-style planned economy. Companies produced on the government's orders, caring little about profits or productivity. This kind of mindset is now an "irrational corporate management structure" and is just one of the problems state-owned corporations face, Xie said. More>>>>>

Mergers and acquisitions help Chinese enterprises grow

Chinese firms have entered a "new era" of capital and financing where companies' growth will be fueled by mergers and acquisitions, an industry insider told China.org.cn.

Zhu Jimin, current chairman of the China Iron and Steel Association (CISA) and president of Shougang Group, China's sixth largest steel producer, said he believes the government will encourage domestic firms to initiate mergers and acquisitions under the joint-stock system to push forward industrial reform.

"Low centralization, wasting of resources, rising costs of energy and raw materials, environmental pollution and frequent accidents are challenging China's industries, particularly the heavy industries like mining, steel and construction. Through mergers and acquisitions, enterprises can become stronger and have more resources to resolve these problems," Zhu said. More>>>>>

HK RMB offshore center boosts trade

A financial expert attending this year's National People's Congress (NPC) session said the creation of an offshore RMB trading center in Hong Kong would make the city Asia's major destination for RMB currency trading.

Lau Pui-king, a professor at the School of Accounting and Finance at Hong Kong Polytechnic University, believes the establishment of Hong Kong as an offshore RMB trading center will greatly benefit international trade.

"[The center] will not only facilitate the evolution to full RMB convertibility, but also endorse Hong Kong's position as the leading international financial center of China and the Asia-Pacific Region," Lau told China.org.cn. More>>>>>

BOC president: Moderate monetary policy helps enterprises grow

Leaders in the financial sector have echoed the government’s call for a more moderate monetary policy and modest RMB appreciation, despite the short-term effects that the changes may have on businesses, particularly in China's export industry.

While the RMB's appreciation is mainly based on the requirements of the currency market, a moderate RMB appreciation will help enterprises grow in the long run, Bank of China (BOC) President Li Lihui told China.org.cn in a recent interview.

"RMB appreciation does generate pressure on the export industry, especially on the low value-added sectors. If [appreciation] exceeds the profit margins of most enterprises, they may suffer a fatal attack," Li said. However, RMB appreciation, Li said, would "help promote [firms'] restructuring" in the long term. More>>>>>

SMEs call for flexible loan policies

Small- and medium-sized enterprises (SMEs) need more assistance from banks after the financial crisis of 2008, an entrepreneur said during China's "two sessions" in Beijing.

The "two sessions" refer to the annual sessions of the National People's Congress (NPC), China's top legislature, and of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), the top political advisory body.

Wang Yongzheng, vice president of the Tianjin Commercial Association, said small businesses are not only the major engine of economic growth, but also an essential power of job creation. He is also a member of the CPPCC. More>>>>>

Tax reform needed to boost service sector: Expert

China needs tax reform to create a business environment favorable to continued growth, particularly in the service sector, according to a leading taxation expert.

Xu Shanda, former deputy director of the State Administration of Taxation, told China.org.cn: "China should put tax reform on the agenda in the coming 12th Five-year Plan, to boost all industries, particularly service industries."

Xu said tax reform could help adjust China's industrial structure and promote the development of service industries, adding that the current tax system imposes an unfair burden on domestic players in the service sector. More>>>>>