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China's SOE Reform at Fortune Forum One of the major challenges China is confronted with is deepening the reform of its state- owned enterprises (SOEs), both foreign and Chinese economists agreed September 28 at the ongoing Fortune Global Forum. At a meeting today on China's economic development, former US trade representative Carla Hills, research fellow of the Chinese Academy of Sciences, Hu Angang, senior fellow of the Brookings Institution, Nicholas Lardy, and Professor Justin Yifu Lin of Beijing University, all proposed that the success of the SOE reform lies in reducing the burdens of enterprises, creating more employment opportunities, and sharpening their competitive edge. Professor Lin said that while the output of the SOEs accounts for half of China's gross domestic product, they employ two-thirds of the country's labor force. "Therefore, the SOE reform is an important issue," he added. Too many governmental functions shouldered by SOEs increase their production costs, thus dragging them into an unfavorable position in market competition, Lin said. Therefore, he added, the priority of the SOE reform should be the establishment of a social security system. As an expert on the Chinese economy, Lardy said that the debt- equity swap is part of the solution to the SOE reform. He expressed his hope that this practice will play a more important role in the reforms, adding that he also appreciates the efforts to reform China's pension system. Hu Angang, an expert on China's taxation reform and regional disparities, said that no nation, especially one with a huge population, can avoid new challenges. The point is how to adjust the policy in the face of these challenges. Hu said that one important factor hindering the SOE reform is the lack of a comprehensive social security system. "I think reform of the social security system should be listed as the top priority in the next five-year plan," he said. "The issue of employment should be another priority." In another development, former US trade representative Carla Hills, who was in charge of General Agreement on Tariffs and Trade negations with China in the Bush administration, said that China's accession to the World Trade Organization will help improve the efficiency of the country's SOEs. As more foreign firms enter China, a competitive environment will be created and they will have to improve their competitiveness, she said. (Xinhua) |
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