China's business hub is leading the country in pursuing reforms of State-owned enterprises, with a 20-point overhaul plan, report Wei Tian and Wang Ying in Shanghai

Shanghai is looking to bring more private-sector capital and outside managers, including those from overseas, into its State-owned enterprises to get more out of its 10 trillion yuan ($1.65 trillion) in government assets.

The East China city's move is also expected to set an example for other cities, as China is ready to let the market play a bigger role in its State-dominated economy in the next round of reforms, experts said.

Shanghai Mayor Yang Xiong vowed to "lessen government intervention in the SOEs' daily operations as much as possible and give companies in competitive sectors more management autonomy."

The city's massive State capital will mostly withdraw from the sectors on which it has traditionally focused. Instead, the money will be shifted into emerging industries, advanced manufacturing and the service sector, as well as activities that raise living standards, Yang said.

Yang made the comments on Tuesday at a news conference in Shanghai, which was held to announce the release of a 20-point reform plan.

The plan is the first such program announced by a local government since the Third Plenum of the 18th Central Committee of the Communist Party of China urged bolder reforms of State-owned assets.

Under Shanghai's plan, at least 80 percent of the assets will be moved to emerging sectors and public projects over the next five years.

Also, Shanghai's SOEs will have to hand over at least 30 percent of their profits by 2020, as ordered by the Third Plenum.

That share of the profits will in turn be divided into three equal parts, to be used in an industry adjustment fund, for infrastructure construction and on social programs.

To make supervision easier, the local SOEs will be divided into three categories: those in competitive sectors, those that focus on special projects and those responsible for providing public services.

The reforms will focus on those in competitive sectors.

"For companies in competitive sectors that are ready to go public, we'll get them on track for IPOs as soon as possible.