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China's SOEs Embrace Modern Enterprise System
China's state-owned enterprises (SOEs) have made headway in establishing modern enterprise systems during the ninth five-year-plan period (1996-2000), leading to obvious improvement in their performances.
According to figures provided by the State Development Planning Commission (SDPC) Monday, from 1994 to the end of 1999, 2,016 of the 2,473 SOEs selected for reform had converted to a limited company system as defined by the Corporate Law.
A survey of the leading 520 SOEs shows that by the end of 1999, 295 had converted to a limited company system, with some introducing diversified ownership.
By the end of 1999, Chinese enterprises had raised 600 billion yuan (US$72.29 billion) from domestic and international capital markets. Most of the Chinese companies listed both home and abroad are transformed SOEs.
Of the above-mentioned 520 SOEs, 257 are now listed companies.
Experts said the reform has helped identify the true investors in SOEs and clarify the management's responsibility to investors.
The introduction of diversified ownership has strengthened the state capital's control and influence over the economy.
By the end of 1999, 2,473 SOEs held capital of 493 billion yuan (US$59.40 billion), of which 367.5 billion yuan (US$44.28 billion) is state capital, 70.1 billion yuan (US$8.45 billion) is corporate capital and the remaining 55.4 billion yuan (US$6.67 billion) is from private and other sources.
Another major reform concerning SOEs also took a bold and important step during the ninth five-year-plan period, namely, the disconnection of enterprises with government departments.
By order of the government, the armed forces, police and other law enforcement agencies, departments of the party and the government have disconnected with their enterprises.
The government has stepped up its supervision over SOEs. Since 1998, it has dispatched 38 inspectors to 62 major SOEs. The government plans to transform the inspectors into a standard board of supervisors system.
The reforms have paid-off. SDPC figures show that state-controlled enterprises witnessed a 7.8 percent growth in asset values in 1999. Their turnover and profit rose 5.6 percent and 21. 5 percent, respectively.
In the first half of 2000, the profit of state-owned and controlled industrial enterprises soared 200 percent.
Experts believe that the government's goal of saving major SOEs from loss-making by 2000 is achievable.
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