SOEs reform stressed to revive rust-belt

Home>>Business

Last updated at: (Beijing Time) Tuesday, October 14, 2003

SOEs reform stressed to revive rust-belt

DISCUSSION

CHINESE

SEND TO FRIEND

The three northeast China provinces of Heilongjiang, Jilin and Liaoning have stepped up their efforts to reform and retool the state-owned enterprises (SOEs) in a bid to revitalize these major but lagging industrial bases.

Heilongjiang has worked out a plan to revive its old industries, with the main efforts focusing on the reform of SOEs and the strategic readjustment of the state economy.

The provincial government has set up a promotion team guiding reforms in over 400 SOEs in the province. Meanwhile, the government also began gradually reducing the shares of SOEs it owned.

The same is happening in Liaoning Province, which was once a famed industrial center in China in the 1950s and '60s but became gradually sluggish in marching toward the market economy in the mid-1990s due to its single economic structure, intensive with heavy industry.

Its provincial capital city of Shenyang has sped up the privatization of state-owned shares. The city's nine listed companies have transferred state-owned shares to other forms of assets so far.

The other province in the rust-belt, Jilin, has been retooling state-owned firms by withdrawing state-owned shares from the medium and small-sized ones.

The move follows a decision by the Chinese government in early September to turn the outdated industrial bases in the northeast into new and essential growth areas of the national economy.

The Political Bureau of the Communist Party of China Central Committee last week called for accelerated efforts to revitalize the old northeast industrial base, calling it a long-term and arduous task.

The three northeast provinces, known as the "industrial cradle of China", played a vital role in the country's industrial development from the 1950s to the early 1970s.

The northeast region produced the country's first steel, machine tools, locomotives and planes after the founding of New China in 1949 and is still seen as having much advantage in these fields.

However, many of the traditional industrial firms established in the 1950s when China adopted a planned economic system have become less competitive since the country implemented the policies of reform and opening to the outside world, and moved toward a market economy two decades ago.

The proportion of the region's industrial output value to the national total has dropped to 9 percent from 17 percent. Some loss- making state industries were closed, laying off large numbers of workers.

"It is time to get rid of the effects of the planned economy completely and establish a market-oriented economy, which might be the only solution for these enterprises," said Xu Chuanchen, a professor who researches stated-owned sectors at Jilin University.

Compared with the past when state-owned firms manufactured products according to the state plans, Xu said, currently, state- owned firms in the northeast conduct production in accordance with market demand. But, he noted, free transfer of property rights and free circulation of manpower and capital would probably be the most important parts in the revitalization campaign.

Xu's view is echoed by many economists and government officials.

Xun Shaoyan, an economic scholar with Jilin University, said that it is imperative to reform the management mechanism in operating SOEs and to realize free circulation of property right and human resources in order to achieve the rejuvenation of the lagging industrial bases.

The governments of the three northeastern provinces are aware that their real responsibilities are to work out policies and create a nice environment for the businesses to operate under market rules.

With the promotion of the central government, the reform and retooling of state-owned firms in the northeast region is stepping into a new stage, said experts.

Questions?Comments? Click here

Northeast China steel giant vows to pioneer rust-belt revitalization

Ownership transfer to spur economic development in northeast

SOEs seeing revival in China's rust-belt

Chinese, US presidents to meet in Bangkok ( 2 Messages)

Activists sail to Diaoyu Islands to proclaim sovereignty ( 5 Messages)

When will Nobel dream come true for China? ( 10 Messages)

US, don't be doubtful of everything: commentary ( 5 Messages)

China to launch manned space flight on Oct. 15 ( 33 Messages)