Non-State Sectors Help China's Market-oriented Transition

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Last updated at: (Beijing Time) Sunday, September 22, 2002

Non-State Sectors Help China's Market-oriented Transition

The State-owned and non-State economic sectors are supplementing each other, jointly driving China's economic growth, according to a front-page article in China's leading newspaper People's Daily.

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The State-owned and non-State economic sectors are supplementing each other, jointly driving China's economic growth, according to a front-page article in China's leading newspaper People's Daily.

Subtitled as "Meeting the 16th National Congress of the Communist Party of China with the New Accomplishments", a serial report ahead of the Party's much-anticipated rally on November 8, the article said both the State-owned and non-State sectors have advanced remarkably since 1989.

Despite the unfavorable world economic climate in 2001, State-owned industrial enterprises and the industrial firms with a State-controlled bulk equity together turned out a profit of 233 billion yuan (US$28.17 billion), contributing to the State coffers 67 percent of the total taxes delivered by all industrial enterprises.

Moreover, the average individual productivity, per capita profitability and the per capita tax turnout all increased at varied degrees compared with the previous year.

To date, 60 percent of Chinese fiscal revenues and 70 percent of employment opportunities come from State-owned enterprises, according to the article.

Meanwhile, non-State sectors have also experienced fast growth.

By 2001, there were 24.23 million self-employed businesses and 2 million private firms registered in China, with the combined output and the sale volume both standing at about 2 trillion yuan (US$241.84 billion), which was respectively 20 percent and 52 percent of the national totals.

Over the past ten decade, the contribution by the self-employed and private businesses to China's gross domestic product has risen from less than 1 percent to over 20 percent, said the article.

During the same time, foreign-funded enterprises also grow steadily.

In 1997, there were in China 236,000 foreign-funded firms, with a total investment of US$303 billion. By the 2nd quarter of this year, the number of foreign-funded firms stood at 205,100, but the total investment has shot up to US$923.54 billion.

In terms of the fixed assets investment, non-State businesses constituted nearly 50 percent of the total fixed assets investment in China by June of this year, of which the collective-owned businesses made up 12.5 percent, self-employed ones 15.5 percent, and the remaining 21.2 percent, according to a research by the Office of Economic System Reform under the State Council.

As China goes deeper in restructuring its State-owned sector, which means to dismiss more out of the over-staffed State firms, and more farmers are leaving their farming land for cities, China is facing a demanding task of creating enough jobs.

Before the State-owned sector can really be revitalized, China will have to rely on the non-State sector to offer more jobs.

The Chinese Government has obviously noted this.

Last week, Wei Jianxing, a member of the Standing Committee of the Political Bureau of the Chinese Communist Party's Central Committee, the highest political power organ in China, called for enforcing a democratic management in non-State businesses.

There must be a stable and harmonious relationship between the workers and the employers in the non-State firms to call up initiative and creativity of all parts to better serve the strategic target of China's reform, development and stability, he said.

By PD Online staff Forest Lee

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