On June 5, 2015, General Secretary Xi Jinping presided over the thirteenth meeting of the Central Leading Group for Comprehensively Deepening Reform (中央全面深化改革领导小组), and reviewed and approved the Several Opinions on Adhering to Party Leadership and Strengthening Party Building in Deepening State-owned Enterprise Reform (《关于在深化国有企业改革中坚持党的领导加强党的建设的若干意见》 ), stating that party building and the reform of state-owned enterprises (SOEs) should be planned simultaneously to unify strengthening party leadership and improving corporate governance and clarify the legal status of SOE party organizations in company corporate governance structures, pointing out the direction for strengthening and improving the Party’s leadership of SOEs. 

On October 10, 2016, General Secretary Xi Jinping emphasized at the National State-owned Enterprise Party Building Work Conference (全国国有企业党的建设工作会议) that upholding the Party’s leadership over SOEs is a major political principle and must be consistent and that establishing a modern enterprise system is the direction of SOE reform and that it must be consistent. 

Three years ago, the former Baosteel (宝钢) and Wuhan Iron and Steel (武钢) implemented a joint reorganization and formally established China Baowu Iron and Steel Group Co., Ltd. (中国宝武钢铁集团有限公司). Making use of the unique advantages of the party organization, reforming and improving the decision-making mechanism for major issues, and promoting high-quality development of the enterprise has become a major issue facing China Baowu. 

China Baowu has integrated the actual situation of the company in building a decision-making system and operating mechanism system to ensure that all governance entities exercise their powers and perform their duties with rules to follow and a seamless connection, that discussions and decision-making are standardized and efficient, operations are smooth, major business management matters are scientific and democratic, and risks are controlled. Since the reorganization, China Baowu has doubled its profits for two consecutive years, its operating profits have reached a record high, and its competitiveness, control, influence, and anti-risk capabilities have been significantly improved. 

“Scope of matters + boundary of powers and responsibilities + list of matters” 

Only by forming an effective decision-making execution supervision mechanism with equal rights and responsibilities, scientific standards, operation coordination, and effective checks and balances can we effectively promote the organization, institutionalization, and specificity of the leadership role of the party committee for “controlling the direction, managing the overall situation, and ensuring implementation.” 

The first question is what constitutes a “major issue.” According to Chen Derong (陈德荣), Secretary of the Party Committee and Chairman of China Baowu, China Baowu regards its main leaders as team leaders and organizes special research teams to conduct research. On the basis of systematic study and indepth study of the clear requirements and specific categories of matters for which the Party Central Committee and the State Council of the Central Enterprise Party Committees participate in decision-making on major issues combined with the actual situation of the company, China Baowu makes it clear that major corporate issues include major issues related to the implementation of the Party Central Committee’s major policies and the appointment and removal of important corporate personnel that should be decided by the party committee, as well as, in accordance with laws and regulations, regulatory agency requirements and corporate management and control models that should be decided by the board of directors and the management of major business management issues. As a result, the scope of major issues is clearly defined. 

The second question is how to arrange decision-making procedures for major issues. China Baowu scientifically divides the boundaries of powers and responsibilities of governing bodies based on the three principles of “matching authority and function positioning, equal power and responsibility, and unifying decision-making quality and efficiency” to determine decision-making procedures for major issues. For instance, matters related to the implementation of the Party and country’s lines, principles, policies, major special tasks, the strengthening of party building, and appointment and removal of important personnel are directly decided by the party committee. Other major matters related to operations and management, after preliminary study and discussion by the party committee, are decided by the board of directors or by the management according to authorization. 

On the basis of improving its core system, China Baowu has established a list of decision-making items, which include 81 major decision-making items that involve overall direction, require attention, or present major risks, such as strengthening party building, appointment and dismissal of important personnel, strategic planning, institutional mechanisms, business management, asset management, capital operations, major investments, and large-amount capital operations. Taking the “company development strategy and mid- to long-term development plan” as an example, the main decision-making body is the board of directors. The standing committee of the party committee checks in advance and the company’s executive meeting, convened and presided over by the general manager, assumes the responsibility for review. 

“Optimization + refinement” 

China Baowu constantly optimizes its decision-making process: 

—— Before the meeting, decision-making, major decision-making matters, important personnel appointment and dismissal matters, major project arrangements, large-amount fund operation matters, and other “Three Major and One Large” (“三重一大”) matters are submitted to the meeting for collective decision-making, opinions from all quarters are listened to, and in-depth investigations and research are conducted. 

—— During the meeting, there is collective decision-making, and the meeting must meet the specified quorum before it can be convened. Participants must fully discuss the decision-making matters one by one and respectively express their opinions and explain their reasoning. Those who do not attend the meeting for any reason can entrust the expression of their opinion in writing. 

—— After the meeting, decision-making is carried out. If individuals participating in the decision-making have different opinions on the collective decision-making, they may retain them or report them to superiors. Before a new decision is made, they shall not change or refuse to implement the prior decision without authorization. 

In order to not only ensure standardized exercise of power but also ensure the efficiency of decision-making, China Baowu has refined the main points of the review. In the preliminary research and discussion, attention is given to reviewing whether decision-making matters are in line with central policy guidelines and national strategic deployment, whether they are conducive to enhancing the competitiveness of the enterprise and realizing the preservation and appreciation of state-owned assets, whether there are risks with regards to politics, law, integrity, environmental protection, stability, or other matters, whether the legitimate rights and interests of the employees and the public are protected, whether they comply with the “Two Regulations” (“两规”) (standards (规范) and planning (规划)), and whether professional management opinions have been listened to. When submitting to the board of directors and management for deliberation and decision, the focus is on the strategic direction of decision-making matters, the responsibility of the industry, the improvement of corporate strength, the allocation of industrial resources, the comprehensive value of risks and benefits, and the arrangement of internal decision-making authority, supplemented by compliance review opinions. 

“Three upholds + four checks + four non-submissions” 

Looking through China Baowu’s decision-making records, we can find some examples: when the “Group Company Strategic Planning Framework Adjustment Proposal” was first submitted, because the proposal is immature and insufficiently prepared, there was no decision-making at the meeting, and it was submitted for deliberation at the subsequent meeting; when preliminarily researching “the proposal to increase the capital of a subsidiary company,” because the reasons for capital increase, capital increase channels, business development path after capital increase, and other important matters were unclear, the Standing Committee of the Party Committee rejected it and did not submit it for decision by the board of directors and managers. 

This is the “remaining trace” (“留痕”) of the operation of the “Three Upholds, Four Checks, and Four Non-Submissions” (“三个坚持、四个把关、四不上会”) decision-making operation mechanism established by China Baowu. 

When making decisions on major issues, we must prevent preliminary procedures from serving as going through the motions or for show and the party committee must be prevented from taking the place of the board of directors and the managers in making direct decisions and commands. The “Three Upholds” are upholding the collective research and discussion of the party committee, avoiding substituting the secretary’s personal opinions for the party committee’s opinions, upholding the full implementation of the party committee’s intentions, and upholding the party committee’s checks and non-submissions for decision to support the effective functioning of the board of directors and management. The “Four Checks” control politics, direction, discipline, and rules. On this basis, the implementation of the “Four Non-Submissions” is as follows: non-submission for major changes in decision-making conditions, non-submission for temporary motions, non-submission for insufficient argumentation, and non-submission for large differences in opinion. In the past two years, China Baowu has organized 55 party committee standing committees and checked 137 proposals. Among them, seven failed to be submitted, two failed during preliminary research, and 16 were revised and submitted to the board of directors and management for decision-making.