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SOEs Grow Stronger Through Reshuffle
Minister of Information Industry, Wu Jichuan, said recently that China has formed a new area of competition in the sector of added value telecommunications services by reshuffling the Chinese telecommunication companies.
The move is designed to meet challenges of international competition that will come with China's accession to the World Trade Organization, according to Wu.
In the first half of the year, four telecommunication operators emerged and began operation, putting an end to the monopoly of the market by a single State-owned operator over the years.
The restructuring and establishment of China Telecom, China Mobile Telecom, China Unicom and China Satellite Telecom proved to be one of the most remarkable parts of the strategic reorganization of the State-owned enterprises (SOEs) in China.
Reorganizing the SOEs is an important part of the reform and development of SOEs that China is pushing forward with.
Chinese President Jiang Zemin pointed out earlier this year that the reform of SOEs should focus on improving the competitiveness of the SOEs.
In order to foster a group of competitive large-sized SOEs, the Chinese government has accelerated the pace in this respect during the Ninth Five-Year Plan period from 1996 to 2000.
In 1997, the number of large SOEs carrying out experiments in forming large enterprise groups reached 120, doubling the figure in 1991.
In 1996, the Chinese government designated 300 key large SOEs that have priority in enjoying incentive government policies on reforms and reorganizing the SOEs. The figure was increased further to 520 in the following years.
As a result, a group of large enterprise groups have emerged over the past few years, including the China National Petroleum Corporation (CNPC) and the China National Petrochemical Corporation (Sinopec).
Set up in 1998, CNPC and Sinopec have been ranked among the top 500 companies in the world.
By integrating a wide range of businesses in the oil industry, the two giant companies have greatly enhanced the competitiveness of China's oil and petrochemical industries in the world.
The Chinese government has also pushed forward the integration of SOEs by establishing the Shanghai Steel Enterprise Group and 10 enterprises groups in the defense industry.
Since China reshuffled the SOEs, it has also accelerated the pace of listing large SOEs on overseas stock markets.
China Unicom was listed on the New York Stock Exchange and the stock exchange of Hong Kong in June. With the aim of raising 6.278 billion US dollars in stock markets overseas, China Unicom registered the largest overseas fund raising activity ever conducted by Asian countries except Japan.
As it concentrated its resources on the development of large, competitive State-owned enterprises, the Chinese government has been firm about shutting down redundant and outdated production capacities.
After demolishing over 9 million outdated cotton weaving spindles over the past two years, the textile industry realized the goal of turning losses into profits one year ahead of schedule.
In 1996, the Chinese government closed a large number of small oil refineries, thermal power plants, glass mills and cement factories.
So far this year, it has closed 36,000 small coal mines and 108 sugar factories, reducing the production capacity of coal and sugar by 300 million tons and 28,000 tons respectively.
The strategic reorganization of the SOEs has helped improve the efficiency of the SOEs as a whole. In the first seven months of the year, Chinese SOEs registered total profits of 113.2 billion yuan (13.6 billion U.S. dollars), 2.9 times that of the same
period of last year.
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