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SOEs' Technological Upgrade Enters New Phase in China
China has planned to continue using treasury bonds to fund the technological upgrading of state-owned enterprises (SOEs) this year, in an aim to make a group of conglomerates more internationally competitive.
Gan Zhihe, director of the Investment Sector under the State Economic and Trade Commission (SETC), made the remark Friday.
Among the 150 billion yuan of treasury bonds expected to be issued this year, China plans to earmark seven billion yuan for technological upgrading and industrial renovation, he said.
Together with the 2.7 billion yuan of surplus renovation funds from last year, China is expected to have 9.7 billion yuan of funds for technological upgrading this year, which is expected to stimulate 120 billion yuan of investment.
In the January-February period, China's SOEs used some 17.65 billion yuan on technological upgrades, up 22.6 percent over the same period of last year, the official said.
Since 1999, the Chinese government has increased the proportion of T-bonds used for technological upgrading, and provided such bond subsidies for 880 key projects, involving 19.5 billion yuan of T-bonds over the past two years.
During the process of China's reform drive, it has not been unusual for the central fiscal authority to earmark subsidies for technological upgrading, the official said, "but it is unique this time because those subsidies triggered 240 billion yuan of investment."
Of the 880 projects, the bulk are still under construction, and 105 of them had already been put into operation by the end of 2000, and the rest are expected to be completed within two years, and are estimated to add some 60 billion yuan of profits.
The practice of using treasury bonds for technological upgrading had reversed the downside trend of upgrading investment growth in China, which went on for two consecutive years since 1998.
The total renovation investment reached 507.7 billion yuan in 2000, a rise of 13.2 percent compared with the corresponding period for the previous year.
According to the official, China this year will give priority to the technological upgrading of such sectors as metallurgy, the non-ferrous metals industry, petrochemicals, textiles and machinery, as well as some conglomerates that may have great growth potential.
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