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SOE Future Affects Foreign Businesses
China's reform of State-owned enterprises will effect the success of foreign business people attracted by the open-market policies and an expected entry into the World Trade Organization.
This is the view of Yu Xiaosong, chairman of the China Council for the Promotion of International Trade. Yu said impatience, radical action or mistakes on the reform route would set back the Chinese economy and cause social instability. Orderly growth of the Chinese market would also be affected by improper decisions, Yu said.
Previously the vice-minister of the State Economic and Trade Commission, Yu commented at the Asia Society's 11th Annual Corporation Conference, which ended yesterday in Shanghai.
Also addressing SOEs, Premier Zhu Rongji told the conference on Wednesday that most large and medium-sized SOEs would stop losing money this year.
The State-owned enterprises contribute about 40 per cent of China's gross domestic product, 60 per cent of government revenues and 70 per cent of urban employment.
Decades of central planning, under which the government backed its companies and gave cradle-to-grave benefits to workers, has left SOEs overstaffed and in debt. This way of business does not fit with today's market economy or competition from foreign and private business people.
China's pending entry into the WTO means tough challenges for SOEs that do not change with the times.
Reforms, Yu said, will make SOEs independent companies instead of protected government affiliates.
The government already has taken measures to let SOEs operate beyond previous geographic and economic limits.
Most smaller SOEs will change ownership, and the bigger ones will become share holding firms. The government will hold stakes in these and not participate in the management.
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