China has reached the "turning point" in revamping its large and medium-sized state-own enterprises (SOE), thanks to the government's "pro-active fiscal policy" and various reform measures, said Sheng Huaren, minister in charge of the State Economic and Trade Commission, in Beijing on January 7.

"Most important of all the government measures were allowing more bankruptcy, merger, debt-equity swap and government subsidiesfor technological renovations," Sheng told a group of 200 deputiesin Beijing to the National People's Congress.

Xiang Huaicheng, minister of finance, and Wang Chunzheng, vice-minister of State Development Planning Commission, also joined Sheng in reporting the country's economic work to deputies to the country's top lawmaking body.

In the first 11 months of 1999, industrial profits of the SOEs and enterprises with SOEs as major stock owners doubled the volumeof the same period in 1998 to 76.51 billion yuan, and the number of loss-makers has decreased by about half from the end of 1997 tosome 3,000 today, Sheng revealed.

In the first ten months last year, 26 of China's 30 provinces, autonomous regions, and municipalities saw their overall SOE performance improved to varying degrees.

The northeastern provinces, China's heavy industry center and in the red for years, all started to make money, and the profits made by Heilongjiang Province jumped by 108.3 percent over 1998.

Textiles, petrochemical, machinery, electronic, pharmaceutical,metallurgy, and construction material industries all started to make profits, Sheng said.

According to Wang Chunzheng of the State Development Planning Commission, the 60 billion yuan national debt in 1999, in additionto 100 billion yuan debt in 1998 floated for the purchase of state-owned banks and designed to increase fixed assets investment, has greatly contributed to the stimulation of market demand and the improved performance of the country's SOEs.

Sheng, minister in charge of the State Economic and Trade Commission, said that bankruptcy and mergers were the most important factors leading to the streamlining and restructuring of the SOEs.

More than 6,400 large- and medium-sized SOEs saw their size reduced and profits increased through these means during the three years from 1997 to 1999, and 860 such SOEs, which benefited from the same efforts last year, are expected to stop losing money, Sheng told the legislators.

He also disclosed that 90 billion yuan was used in the pilot debt-equity swap scheme for 45 loss-making enterprises by mid-December last year, and most of the enterprises involved should put an end to their losses and make profits that year.

According to Finance Minister Xiang, the state put 13 billion yuan in subsidizing the technological renovations of 648 SOEs last year, with a total investment of 60 billion yuan.

Other factors contributing to the SOE revamping include: down-sizing out-dated or inefficient industries, increasing export rebates, cracking down upon smuggling, and improving government regulations and the internal operation mechanism of SOEs, the officials said.

However, Sheng pointed out that market demand is still slack, and the number of loss-makers and their losses and bad debts are still huge.

"The turn for the better with regard to SOE profits and efficiency is preliminary, but it is a shot in the arms for us to realize the three-year goal of rejuvenating many of them," Sheng said.