A signed article in the People's Daily today calls this year one of a decisive battle for the reform of the state enterprises.

It says that the reform of the state enterprises is seeing a turning point, showing a great improvement in their profit-making level. It quotes statistics as indicating that the state and state holding industrial enterprises posted a total profit of about 90 billion yuan in 1999, growing about 70% which is the greatest growth rate since 1992.

From the regional perspective, Profit had geared up or been reduced in these enterprises in 90% of the 30 provinces, autonomous regions and municipalities under direct central jurisdiction.

Economic returns in most trade and professions had improved. 800 million yuan was reaped in textile industry last year and profit in oil and chemical trades registered about twice as much as in the preceding year.

By the end of 1997, there were 6599 loss-incurring big and midsized state and state holding enterprises in China. Now 3100 had been reduced from this number. So, the goal of freeing the state enterprises from a tight corner can be attained in three years.

Then what steps are to be taken to extricate the loss-suffering state enterprises from the fix? First, A great effort is to be made in the merger and insolvency of state enterprises. Second, an endeavor is to be made to relieve the state enterprises from debt burden. The debt-share swap will be continued. Third, smuggling will continue to be cracked down and small enterprises which cause wastes, create pollution and add to surplus inferior products will be phased out to create an optimized ambience for the state enterprises. Fourth, bank rates will be cut again to reduce the financial burden on the state enterprises. And export rebate rates will be raised to encourage export. Fifth, management will be enhanced in the state enterprises and reforms in the enterprises will be depended.

While pointing to the favorable factors, the article also lists difficulties in lifting the state enterprises from straits: Market competition will turn acute after China's entry into WTO; demand is flat in the market so it is hard for the enterprises to start off; over-capacity has caused by overlapping construction over the past years; and the irrational economic structure is striking.