This article, written by Ji Yuxiang with the Policy Research Office of the CPC Central Committee, on what he has gained from the study of the Decision of the Fourth Plenary Session, reads in part as follows:

The Decision of the CPC Central Committee on Some Major Issues Concerning the Reform and Development of State-Owned Enterprises has made a series of stipulations on this question. This is rarely seen in previous documents of the CPC Central Committee, so we can see its importance and the high attention the CPC Central Committee has paid to it.

The Decision stresses, from both the micro and macro aspects, the necessity and urgency of establishing a contingent of high-quality operators and managers, pointing out this is the inherent requirement for State-owned enterprises (SOEs) to adapt themselves to the market competitive environment and the establishment of a modern enterprise system. The development from the traditional factory system to the establishment of a modern enterprise system is a kind of fundamental institutional innovation, profound changes have taken place in the enterprises' organizational form of assets, the structure of leadership, and the method of operation and management. However, any system, no matter how best, has to be carried out by persons; and a mechanism, however best, has to be operated by people. The quality of managers determines the performance outcome of the enterprise. Building up a contingent of high-quality managers provides the necessary organizational preparation and personnel quality guarantee for the establishment of a modern enterprise system. Nowadays market competition and international contest are, in the final analysis, a trial of strength in terms of the high or low qualities of personnel and a scramble for human resources. State-owned enterprises must bring up a contingent of high-quality managers and entrepreneurs if they want to win their subsistence and development in the fierce market competition. Whether or not such a contingent can be set up directly concerns the rise or fall, success or failure, of SOEs. The Decision specifies the kind of quality SOE managers should have, emphasizing that they must have a strong enterprising spirit and a high sense of responsibility, have a systematic grasp of modern management knowledge, understand operation and management and are good at making scientific decisions in light of market changes. The Decision has also made an actual differentiation of managers and entrepreneurs, this helps to promote entrepreneurs to become specialized and professional- and market-oriented.

The Decision regards the in-depth reform of SOE personnel system and the creation of a good policy-related environment as a primary link in impelling outstanding managerial personnel to come to the fore. For many years, we have been managing SOE leading personnel by the method used for managing Party and government cadres, now this method no longer suits the new situation of enterprise reform and development. In view of this, the Party Central Committee has decided to cease fixing "the administrative ranks of enterprises and enterprise leaders", this represents a major move for reforming the personnel system of SOEs. However, abolition of the cadre identity of SOE leading personnel absolutely does not mean giving up management over them, on the contrary, we must strengthen and improve management in accordance with the following principles and methods: First is we must "adhere to the Party principle for management of cadres", but the "management method must be improved". Second is we must stick to the principle of management over different types of cadres. Third is we must uphold the principle of integrating the management of persons and affairs and avoid the practice of one leading body exercising management over many departments. Fourth is we must stick to the principle of institutionalizing and standardizing management. In accordance with the enterprise characteristics, we should establish and improve the methods for the cultivation, selection, management, assessment and supervision of operators and managers, the heart of the matter is that we should have a set of concrete and effective measures for the selection and appointment of managers. Fifth is we must adhere to the principle of openness, equality, competition and selection of the superior and optimize the allocation of intellectual resources. Sixth is we must persist in the principle of education and training to comprehensively improve the qualities of operators and managers.

For a long time in the past, there have existed both the problem of insufficient encouragement to SOE operators and managers and the problem of lack of adequate supervision over these managers. In a bid to change this situation, the Decision has, in the reform spirit, made a series of stipulations on establishing and perfecting incentive and restraint mechanisms. The adoption of the method of linking managers' income with the enterprise's business achievements is a major policy taken to inspire managers through the distribution of benefits. Its essence is to allow SOE operators and managers to participate in the enterprises' profit distribution, so as to give play to their wisdom and talent to the maximum. The Decision has actually affirmed such distribution methods as the manager (factory director) annual salary system and the holding of stock rights, methods tried out by a small number of enterprises after drawing on international experiences. In the spirit of combining the display of the Party's political superiority with the application of a market mechanism, the Decision calls for integrating material incentive with spiritual encouragement, and advocates the spirit of dedication, fully stressing the spiritual factor's stimulating role.

Establishing and perfecting the supervision and restraint mechanisms for SOE operators and managers is the pressing task at the moment. An investigation result shows that 60-70 percent of loss-making enterprises in some localities are caused mainly by such man-made factors as mistaken decision making and corruption on the part of their leaders. In view of this, the Decision has set down the following strongly purposeful stipulations: First, strengthening and improving supervision mechanisms, and integrating external supervision and internal supervision. This includes intensifying legal supervision and public opinion supervision. At the same time, active efforts should be made to create conditions for strengthening the corporate management structure, particularly for standardizing the system of the council of supervisors, giving play to the roles of the enterprise's Party organization supervision and workers' democratic supervision, and gradually strengthening supervision over SOEs from the aspects of system and mechanism. Second, strengthening supervision over enterprises and operators and managers on such major issues as the operation of funds, production and operation, income distribution, appointment decision, honesty and self-discipline. Third, establishing a system for assessing the enterprise's business achievements and a system for investigating and affixing responsibility for mistakes in decision-making, and instituting an economic responsibility auditing system for enterprise leading personnel during their term of office. The Decision stipulates that "anyone who causes heavy losses to the enterprise due to artificial factors such as violating laws and regulations should be subject to legal sanction and shall not continue to assume original or non-local leading post." We should say these are very severe stipulations, conscientious implementation of these stipulations will constitute a great warning and restraining action on SOE leading personnel.