Private investors will soon be allowed to buy into Chinese state-owned companies as authorities look to reform state enterprises to combat the recent economic sluggishness.

On Sunday, China's State Council and the Communist Party Central Committee released a guideline to expand the reform of state companies, according to Xinhua.

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There have long been calls for reforms of underperforming Chinese public enterprises. Chinese-state companies play a crucial role in the market and are a key pillar of the country's economy. However, critics argue that underperforming companies are a burden on the tax payer. As Chinese authorities aim to resuscitate the economy from an unusual torpidity, experts say the reform of state enterprises is even more important at the moment.

As part of the reform, the government may merge some state companies. The salaries of state employees would also be made to align with that of the market and more competent people would be hired to manage these companies to improve their overall efficiency and competitiveness.

One of the most important parts of the latest reforms is the opening of state companies to private investors. Although no exact date have been provided when investors will be allowed to put money into state enterprises. However, reports indicate that investors will be allowed to buy bonds in state companies, as well as swap shares.

There are thousands of state owned firms in China. Just over 100 of them are directly owned by the central government. There had been reports that authorities are planning to merge these companies into 40. However, the latest reform announcement did not detail any such plan.

Chinese state media reported that under the new reform the government intends to "nurture" a set of companies and increase their international competitiveness. Some state firms are also set to be converted into independent entities.

According to the reform guideline, far-reaching reforms are expected to be achieved in the economy by 2020.

TagsChina State-Owned Companies Reform, China State Enterprises, Private Investment China State Companies