China will push ahead with partial privatisation of state-owned enterprises in key industries, the cabinet said late on Thursday, offering hope to advocates of aggressive market reforms aimed at overhauling the bloated state sector.

Chinese SOEs dominate sectors from telecommunications to energy but produce returns far lower than their private peers. Economists say reform of the country’s 150,000 state groups, which control $17tn in assets and employ more than 35m people, is key to revitalising an economy in line for its slowest full-year growth in a quarter of a century.

But SOE reform has proved a tough nut to crack. A master plan released this month was a confusing mix of conservative and liberal elements. Analysts say the plan reflected political wrangling by rival factions with sharply different views of how SOE reform should proceed.