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Huge Headway Made on SOEs
The country has made "huge headway'' in reversing losses reported by its key State-owned enterprises (SOEs) and will redouble its efforts to improve the pathetic performances of the remaining unprofitable firms, a senior official said Sunday in Beijing.
The effort is considered crucial if the central government's 1998 goal of implementing modern corporate systems and returning the majority of deficit-ridden large and medium-sized SOEs to profitability is to be achieved.
Sheng Huaren, minister of the State Economic and Trade Commission, yesterday tried to pump vitality into the morale of the State sector by hailing its overall sound development, while at the same time prodding moribund firms to do better.
"Profits of the SOEs and the State-holding businesses in the first six months have more than doubled on a year-on-year basis to 90.3 billion yuan (US$10.9 billion),'' he told a national meeting of provincial-level economic and trade directors.
Key enterprises in most regions are reporting sound growth momentum, he said.
In 1998, in response to the poor economic performance of the SOEs, which has given rise to various problems that have impeded the progress of China's opening and reform, the central government decided to back the restructuring and redevelopment of SOEs by first bailing most of them out of their dire straights.
Of the country's 6,599 money-losing large and medium-sized SOEs, 3,463 have stemmed their losses, and a growing number of State firms are pressing toward profitability, according to statistics from Sheng's commission.
Between January and June, losses incurred by State firms were reported at 46.3 billion yuan (US$5.6 billion), down by 6.1 per cent from the corresponding period last year, according to Sheng.
The minister urged those who have already reversed their losses to continue optimizing their operational mechanisms and to enhance their self-development capabilities, warning that poor management may cause the firms to fall back to difficulties.
During the past two years, most of those "easier to turn around losses'' have reached their goals. The remaining ones are laden with redundant employees, excessively heavy debts and ageing equipment, meaning they have much more to do to escape their adversity, according to Sheng.
The minister prescribed a list of remedies for troubled State firms that are expected to help them become better-off by year's end.
They include: eliminating backward production capacities; engaging in mergers or declaring bankruptcies; instituting debt-for-equity swaps; pursuing technological transformations and establishing modern corporate systems.
In the course of SOE reform and reversing losses, efforts should be directed to improving their enterprises' efficiencies, to transforming their operational mechanisms and to sharpening their competitive edges, he said.
Industrial and product structural readjustments should be stressed, he said.
Even if China has reached its three-year SOE reform and loss-reversal targets, the country still has a long way to go in revamping its State firms and in setting up a bona fide modern corporate systems in them, Sheng said.
The two-day national meeting for economic and trade directors opened on Saturday in Beijing.
(China Daily)
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