Premier Calls for Greater Efforts to Promote SOE Reform

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Last updated at: (Beijing Time) Tuesday, March 05, 2002

Premier Calls for Greater Efforts to Promote SOE Reform

Premier Zhu Rongji has pledged to push forward the restructuring and reorganizing of the state-owned enterprises (SOEs) as well as the reform of monopoly industries.

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Premier Zhu Rongji has pledged to push forward the restructuring and reorganizing of the state-owned enterprises (SOEs) as well as the reform of monopoly industries.

Zhu said this in the Report on the Work of the Government he delivered at Tuesday's opening of the annual session of the National People's Congress (NPC).

According to the premier, China has made great progress in the SOE reform over the past few years, but the country still faces many difficult problems, and has to continue to work hard and deepen the reforms.

First, a modern corporate system should be firmly established. Continued efforts will be made to adopt a standardized corporate system in SOEs, improve the corporate governance, and change the way enterprises operate.

This year the government will concentrate on examining the modern corporate system established in listed companies to uncover problems and solve them; deepen the internal reform of enterprises; implement reforms of the income distribution system on a trial basis in a few large enterprises managed by the central authorities and companies listed on overseas stock markets; and establish effective incentive and restraint mechanisms for enterprise managers.

The accounting system of the enterprises should be brought into conformity with international accounting practice. Enterprises should tighten and improve their management of quality, costs and marketing. Enterprises should accelerate the application of modern management methods and information technology.

Second, positive efforts need to be made to promote the restructuring and reorganization of enterprises, and form and develop as quickly as possible a number of large companies and enterprise groups that are internationally competitive.

The government should take various measures to relax control over and invigorate small and medium-sized state-owned enterprises.

In restructuring and reorganizing enterprises, efforts must be made to prevent the loss of state assets and evasion of bank debts.

Third, the government will continue to properly handle bankruptcies and mergers of enterprises through well-planned steps, and to pay special attention to making proper arrangements for laid-off workers in accordance with the government policy in order to maintain social stability.

The government will appropriately increase the capital reserves in banks available to write off non-performing loans and bad debts, which will be mainly used for bankruptcies and mergers of enterprises in key industries and regions, especially the shutdown and bankruptcies of mines with exhausted resources, military industrial enterprises and other enterprises that experience special difficulties.

The government will continue to free enterprises from performing social functions.

China will carry forward the reform of monopoly industries. Efforts will be made to break industrial monopolies and establish a proper degree of competition by separating the functions of the government from those of enterprises and by restructuring enterprises.

China will reform the management systems of the telecommunications, power and civil aviation industries as soon as possible and lose no time in drawing up plans for the reform of the railway management system.

The relevant departments need to provide effective guidance to the reform to ensure that production and business operations proceed smoothly and that the workforce is stable.

China will continue to follow the basic economic system to keep public ownership in a dominant position and have diverse forms of ownership develop side by side.

Efforts will be made to seek a variety of effective forms of public ownership. China will continue to develop the mixed ownership and the collective sectors of the economy, encourage, support and guide the sound development of the private and individual sectors of the economy.

China will deepen other reforms to meet the requirements for improving the socialist market economy. The government will formulate and implement plans for the reform of the investment andfund-raising systems as quickly as possible.

China will continue to deepen the reform of the systems of income distribution, as well as reforms in banking, finance and taxation, foreign trade and housing.

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