BEIJING -- Progress is being made in freeing up Chinese state-owned enterprises from performing social functions in a bid to make them more market-oriented, a senior official said Friday.

Peng Huagang, research bureau chief of the State-owned Assets Supervision and Administration Commission of the State Council, said the authority had helped 21 SOEs in solving problems concerning social functions in 2011.

Historically, a state-owned enterprise in China was a social unit, providing not only life-long employment to employees, but also all necessary social services to its workers and their family. This included housing, healthcare, child care, education and groceries.

Social service functions have caused huge difficulty for policy makers in transforming SOEs into market-oriented firms.

The country has been making efforts to free SOEs from social functions since 2002.

Before 2002, SOEs in China provided social services for more than 112 million workers and their families.

SOEs could not be part of market competition fairly because of lingering problems, said Peng.

Certain SOEs still spend billions of US dollars on enterprise-affiliated hospitals, schools and communities, according to SASAC.

SOEs have approximately 5.24 million retired employees and more than 1 million needy workers.