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China Confirms Success in SOE Reform
China has "basically" attained its goal of reforming the state-owned enterprises (SOEs) in three years and relevant figures provided by the government are "authentic," a senior official confirmed Tuesday, January 9.
Sheng Huaren, minister in charge of the State Economic and Trade Commission, addressed the issue at a press conference held by the Information Office of the State Council Tuesday morning.
The latest figures indicate that China's state-owned and state share-holding industrial enterprises were expected to register a net profit of 230 billion yuan (US$27.7 billion) by December last year, an increase of 185 percent on 1997.
So far, 12 of the country's 14 key industries, all 31 provinces of the country and 70 percent of 6,599 major SOEs are making a profit, Sheng noted.
Moreover, a modern enterprise system has been established in 84 percent of the 520 state large and medium-sized SOEs, Sheng said.
He noted that the central government has been keeping a close eye on the accounts of enterprises since July last year to make sure that their declared profits were "reliable," which should exclude funds earmarked for updating equipment, bank interests and employees' pensions.
Moreover, further evidence from the country's taxation department revealed that there were no more tax delays from SOEs in 2000, Sheng said.
The improvement of the overall macro-ecomomic situation of the country, the implementation of pro-active policies and stable monetary policies as well as government's favorable policies, such as debt-to-equity swap, all contributed to the success, Sheng said.
However, Sheng stressed that SOE reform will remain the "core issue" of the country's economic reform in five-to-ten years time, adding that many in-depth problems need to be resolved and the overall profitability of SOEs still need to be improved.
Sheng also cautioned that while some major SOEs were lifted out of difficulty, new enterprises that incurred losses emerged.
He disclosed that about 2,000 SOEs still had hard time by December 2000.
13 Million Laid-off Workers Re-employedSheng told the press conference that 13 million laid-off workers were re-employed by 2000.
Sheng said that China's laid-off population has totaled 21 million in the past three years and been reduced by 15 million so far through reemployment process and other means.
And 96 percent of those that have joined in reemployment centers set by the government, get subsidies for a basic living.
SOE's Profits Double in 2000The minister said that Chinese State-owned enterprises (SOEs) are estimated to earn 230 billion yuan last year, 2.3 times that of 1999.
SOEs earned 208.3 billion yuan in the first eleven months last year, 2.4 times that of the same period in 1999, Sheng said.
They produced profits worth 80.6 billion yuan in 1997 and 52.5 billion yuan in 1998, affected by the Asian financial crisis.
Small SOEs Improve ProfitsSmall-sized state-owned enterprises (SOEs) had stopped a trend of money-losing for six consecutive years and registered net profits for the first time in years in 2000.
Sheng said that the small SOEs reaped in a total of 2.573 billion yuan in net profits for the first 11 months of 2000. He said that the total profits for that year were definitely higher.
In order to invigorate the small SOEs, the Chinese government
has restructured, merged, leased, contracted out, transformed into
share-holding companies, or sold many of them, according to Sheng.
Number of Money Losing SOEs Reduced by 70 PercentChina has reduced the number of money losing large- and medium-sized state-owned enterprises (SOEs) by 70 percent by the end of 2000.
Sheng pointed out that the number of money losing SOEs had been reduced by 4,391, accounting for 66.5 percent the total 6,599 in 1997.
Sheng said that the government has shut down or put into bankruptcy many of the money losing SOEs. Some of the remaining SOEs have become profitable again. And the rest of them have either been merged with other enterprises or restructured into share-holding companies.
SOEs in Two Sectors Still Losing MoneyOnly two of the 14 pillar industries in China were still losing money by the end of 2000, compared with five in 1998.
Sheng told the conference that the two money losing sectors, coal mining and military industries, had greatly reduced their losses by the end of 2000, however.
In the same time, the other 12 pillar industries had either increased their profits or turned losses into profits by the end of the year.
Sheng said that four of the pillar industries posted net losses in 1997. And the figure grew to five in 1998.
He noted that due to the government's efforts to reform and reverse the losses of the SOEs over the past three years, the textile industry turned its books into black again in 1999, one year ahead of schedule.
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