China is preparing to unveil broad reforms for state-owned companies which will see some firms shut and others introduce more diversified ownership, according to media reports, in moves one analyst called a "game-changer".
Worries have mounted that China is slowing reforms because its economy, the world's second largest, is faltering, while the stock exchange remains volatile after a collapse from June.
The rout has prompted broad government interventions, largely seen as anti-market, to try to shore up prices.
A purported Communist party document circulating online said the government will "withdraw a batch, restructure a batch and innovatively develop a batch of state-owned enterprises" but gave no specific details.
Images of nine pages of the supposedly 20-page paper were posted on social media, but their authenticity and source could not be verified.
It emerged after the official Xinhua news agency said that the ruling Communist Party has approved guidelines for "deepening state-owned enterprise (SOE) reform" which will be announced publicly soon.
Reports have previously said that China is considering merging scores of its biggest state firms to create around 40 national champions, from the more than 100 companies managed directly by the central government.
The online document also showed the party urged state firms to diversify their ownership and list publicly after restructuring.
"We consider this round of SOE reform a game-changer of China's economic development," ANZ Banking Group said in a research report on Wednesday.
"By encouraging private sector participation and allowing market force to play a decisive role in resource allocation, the reform will unlock a massive amount of economic value."
Many of China's biggest state firms already have listed units on domestic and overseas stock markets, though the state continues to hold majority stakes.
A key Communist Party meeting in 2013 called for the market to play a greater role in the economy by giving private companies opportunities and requiring state firms to contribute more to public coffers.
Following the meeting, a unit of energy giant Sinopec sold a 30 percent stake in its marketing arm to outside investors for more than $17 billion while a subsidiary of another oil firm CNPC unveiled plans to spin off part of its pipeline business.
The new round of reforms envisions using investment companies to act as shareholders in state firms, similar to Singapore state investment giant Temasek, the China Daily newspaper reported on Wednesday.
But foreign companies complain that China has implemented few substantive market reforms in the last two years.
The economy "has been dominated by strong state-owned enterprises to which the government channelled the population's savings in order to develop large-scale projects," the European Chamber of Commerce in China said Tuesday.
"This approach has been costly and inefficient and has to be abandoned now if the market is to play a decisive role in the economy," the chamber said in its annual position paper.