By Li Hongmei

With the reform of state-owned enterprises having become a set policy, the government of Shanghai, a city used to playing the harbinger for Chinese government's policy, has put forth a detailed program for such reform, offering people a glimpse into the possible course that it will take.

The Shanghai program, dubbed "state-owned enterprise reform version 3.0" within China, fleshes out the policy for reform, the strategy for which was finalized during the Third Plenary Session of the 18th Central Committee of the Communist Party of China, which has just concluded.

According to Chinese-language Shanghai Securities News, the program, mapped out by the State-owned Assets Supervision and Administration Commission of the Shanghai Municipal Government, envisions the management of state enterprises in the city as following the model of Singapore, which set up a holdings firm, Temasek Holdings, to oversee the operation of its state enterprises. The Shanghai commission governs a network of state enterprises, on a scale trailing only the network of central-level state enterprises.

The Chinese central government has announced that during the upcoming reform, it will open up the domestic market breaking the monopoly of state enterprises, especially in the three major fields of petroleum, banking, and telecommunications.

The SOE reform has been regarded as one of the most difficult tasks for the reform program overseen by Premier Li Keqiang, due to the huge vested interests involved. State enterprises play a critical role in the Chinese economy, accounting for 40% of gross domestic product in 2012.

The new Chinese leadership believes the monopoly of state enterprises constitutes a major roadblock for the nation's economy on the way to sustainable development, as reflected in the call of Li Keqiang to break the monopolies to release market vitality. The Chinese government has made the first step down the path of the SOE reform, which promises to be an arduous journey.