Latest statistics show that China's industrial sector registered a 61 percent jump in net profits in the past eleven months and reduced the losses of the slumping enterprises by 12.8 percent.

Experts agreed this indicates that the government's struggle to pull state-owned firms out of difficulties have scored a breakthrough.

Sheng Huaren, Minister of the State Economic and Trade Commission, predicted that the total profit of SOEs this year will surpass 70 billion yuan, 40 percent more than the figure planned at the beginning of the year.

The progress in reform of state-owned enterprises (SOEs) has been considered one of the major factors behind the steady growth of the economy. China witnessed a 7.1 percent of economic growth rate this year, 0.1 percentage point higher than the figure forecast.

Since the beginning of the year, the Chinese government has taken a series of determined steps to turn around money-losing SOEs, including swapping debts of the enterprises for shares of banks.

This year, China made better use of the funds for writing off bad assets and non-performing loans, directing the money mostly to key sectors such as the textile and metallurgical industries. A number of money-losing and debt-ridden enterprises with a bleak future have been forced to shut down.

More than 70 billion yuan was used in this regard, and about 800 loss-making SOEs were closed or merged.

At the same time, a new debt-equity conversion strategy was introduced to help some of the promising large and medium-sized state enterprises, currently heavily in debt, out of trouble.

The State Economic and Trade Commission(SETC) has so far provided three recommendation lists, involving 600 enterprises, for asset management companies which handle the conversion business.

The government has also appropriated a certain sum from treasury bonds to finance technical upgrading of SOEs. Official figures show that this year's investment in key sectors including textile, metallurgical, petrochemical, machinery building, and telecommunications industries for technical upgrading amounts to 172 billion yuan.

Statistics also show that about 3,000 SOEs had been turned around by the end of this year. It is generally acknowledged among economists that China's promise to reverse losses in most SOEs by year 2000 is reasonable.

To ensure the success of the reform, the Chinese government has put development of a sound social security system high on the agenda.

The government has raised the minimum of unemployment insurance and lowest income of urbanites by 30 percent as of July 1 this year. A framework for a social security system consisting of pensions, unemployment and medical insurance is expected to come into being by the end of next year.