The State Council released details on Wednesday for deepening reform of State-owned enterprises by drawing a clear line between the roles of government and SOEs.

SOE supervision authorities need to accelerate deregulation and transform their focus from business management to asset supervision in order to make enterprises into real market players and improve efficiency, said the guidelines.

Xu Hongcai, assistant minister of finance, said the new State-owned investment companies will act as "isolation belts" between the government and the market.

After such reforms, the supervisory authorities should oversee State-owned enterprises through the investment companies in a market-oriented manner, avoiding direct government involvement in business operations, Xu said.

The investment companies could be formed in several ways, such as restructuring qualified enterprises or transferring shares of existing enterprises, according to the guidelines.

Two SOEs, the State Development and Investment Corporation, a State-owned investment holding company, and COFCO Corp, a leading domestic supplier of agri-products and foodstuffs, were chosen by the State Council's State-Owned Assets Supervision and Administration Commission as pilot investment companies in August 2014.

The first two pilots are expected to develop action plans very soon, and the second round of pilots is likely to be chosen in the next two years, said Li Jin, deputy director of the China Enterprise Reform and Development Society, a body under the commission.

Eventually, the country is likely to establish around 30 investment companies, with each leading a number of companies in the same industry, Li told China Daily on Wednesday.

China is aiming for a "decisive outcome" in the next five years in shaping a more rational management system for SOEs and nurturing a more capable generation of SOE entrepreneurs, according to the proposal for China's 13th Five-Year Plan (2016-20).

Li said that against the background of slipping exports and overcapacity, the country needs new drivers to meet its goal of maintaining a mid-to high-level growth rate in the coming five years and SOE reform will be a major impetus for that.