A Chinese political advisor on Tuesday suggested that state-owned enterprises (SOE) raise their competitiveness only in the key sectors that bear on the lifeline of the national economy.

Large SOEs had benefited from the country's loose monetary policy in recent years and taken the bulk of banking loans, and excessively expanded into sectors such as real estate and non-ferrous metals, said Ou Chengzhong, a member of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

Among the 398 economic sectors, SOEs were present at 380 and about 40 percent of them were involved in commonplace manufacturing, processing and commercial and trade sectors, according to the figures quoted by Ou.

Although China is regarded as one of the leading industrial manufacturers in the world, China has to import key equipment in some fields, the political advisor said at the on-going annual session of the CPPCC National Committee.

In this sense, SOEs have to raise their competitiveness with the focus on innovation, high technology, core manufacturing know-how and world-class brands, Ou said.

On the other hand, he suggested that SOEs exit from non-essential economic sectors to make room for the growth of private businesses.

SOEs employ less than 30 million people, while 160 million people work in non-governmental businesses, according to Ou.