Premier Wen sets guildlines for SOEs reform 2004

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Last updated at: (Beijing Time) Friday, February 06, 2004

Premier Wen sets guildlines for SOEs reform 2004

Chinese Premier Wen Jiabao Wednesday ordered the sharpening of the competitiveness of state-owned enterprises (SOEs), in a bid to secure and increase the value of state-owned assets more effectively.

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Chinese Premier Wen Jiabao Wednesday ordered the sharpening of the competitiveness of state-owned enterprises (SOEs), in a bid to secure and increase the value of state-owned assets more effectively.

Wen made this remark after hearing a report from the State-owned Assets Supervision and Administration Commission (SASAC) at an executive meeting of the State Council.

The meeting approved the general goals, guidelines and this year's tasks proposed by the SASAC for reform of the state-owned assets administration system, asking the watchdog to establish a new supervision and management system within three years to ensure that state-owned assets are made more profitable.

The meeting required the SASAC to focus more on assessing the business achievements of SOEs and arranging alternative work for their surplus employees.

The SASAC was also urged to help complete the bankruptcy and closing down of some money-losing enterprises, as well as to strengthen the construction of Party committees within the SOEs, according to the meeting.

The SASAC, whose establishment was considered a key step in the institutional reform of the State Council, has made great contributions to the reform of state-owned assets management system and the development of SOEs last year, it was announced at the meeting.

SASAC Minister Li Rongrong pledged to speed up construction of local State assets supervisory agencies this year and continue to improve the enterprise performance evaluation system.

Li said all the provincial-level State assets supervisory agencies should be established by mid-year.

Also Thursday, SASAC issued the full text of the provisional regulation on the transfer of State-owned assets and equities in domestic enterprises.

The rule, which took effect at the start of this month, asked all domestic enterprises -- except the listed firms and financial institutions -- to enter assets and equities markets to transfer State-owned assets and equities and follow designated procedures.

It was the first time China has issued a specialized regulation on the transfer of State-owned assets and equities. The action is aimed at curbing irregularities during such transactions, which would cause losses for the State and public investors, a SASAC spokesman said Thursday.

Enterprises can choose which assets and equities exchanges to use for transactions, but they should release relevant financial information about their own status and the assets to be sold properly on the exchange platform, according to the new regulation.

Such deals should also get the approval of the general meeting of the employees of the enterprises, rather than be decided by a few leaders, it said.

In the past, lack of transparency during the transaction of State-owned assets has brewed insider-trading and corruption that led to heavy losses for the State and also hurt the interest of enterprise employees and minority investors, the SASAC spokesman said.

Documents on the trading of previously untradable State-owned shares, which make up two-thirds of China's stock market capitalization, will be released at a proper time, Li said.

"We will wait for a while, until the shareholders calm down, for this will avoid unnecessary fluctuations of the stock market and be conducive to the benefits of all parties concerned," Li said.

But the authorities still have more to do to upgrade the overall State assets management scheme by introducing more market-driven rules and practices, said Hu Ruyin, director of the research centre of the Shanghai Stock Exchange.

It needs a specific liability system on both the regulators and entrepreneurs to ensure the efficiency of the reforms and implementation of the rules, he said.

Apart from the two stock exchanges, where shares of the listed companies are traded, China has around 170 assets and equities exchanges for the trade of non-listed companies. Many of these equities exchanges are expected to merge in the next few years and only a few big ones will survive, experts say.

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