Initial success achieved in State-owned economic restructuring

China has successfully walked out of the shadow from the financial crisis in Asia since 1998. And the national economy has been maintaining excellent development with the support from the Central Party Committee and central government. Meanwhile, the national economy has speeded up its restructuring. Except financial enterprises, State-owned enterprises and State-owned holding enterprises (SOEs) not only deepened the reform, reorganization and restructuring, but also consolidated the inner management through separating primary and secondary aspects and reducing staff for greater efficiency. Generally speaking, the SOEs have kept high growth rate and witnessed dramatic increase in economic returns, setting historic new records for years.

With the number of SOEs reduced, the distribution and structural readjustment began to take effect. In recent years, thanks to a series of national reform policies, the total number of SOEs has been reduced by various modes such as reform and reorganization, shutdown and bankruptcy. The total number of the SOEs was 150,000 by the end of 2003. During 1998 and 2003, the net decrease of the SOEs reached 88,000, a progressive reduction of 7.2 per cent year on year. Meanwhile, the distribution of State-owned economy and structural readjustment won initial success. First, the number of small-scale enterprises has been reduced dramatically. There were 13,200 small-scale SOEs registered by the end of 2003, 63,000 less than that in 1998, taking up 71.6 per cent of the total member of the SOEs reduction. Secondly, the enterprises running in the red/under deficit have been cut down greatly. By the end of 2003, the number of the enterprises running in the red/under deficit in China was 74,000, 86,000 less than that in 1998, accounting for 97.7 percent of the total number of the SOEs reduction. Thirdly, the SOEs engaging in general competitive industries have been decreased markedly. Some 11,400 SOEs engaging in general competitive industries operated in China by the end of 2003, 72,000 less than that in 1998, accounting for 81.8 per cent of the total number of the SOEs reduction.

With the expansion of SOEs' asset scale, the capital has been centralized in the fundamental and pillar industries. By the end of 2003, the total amount of SOEs' capital across the countries hit 21.3 trillion yuan, 6.6 trillion yuan more than that in 1998, setting an average increase of 26.4 per cent year on year. During the expansion of SOEs' general capital scale, the capital strength of the fundamental and pillar industries of the national economy was reinforced. The SOEs' capital distributed in the fundamental industries by the end of 2003 reached 11.4 trillion yuan, taking up 53.5 per cent of the SOEs' total capital or increasing by 20 per cent than that of 33.6 per cent in 1998. As for those distributed in the five industries involving coal, petrochemical, metallurgy, electric power and post and telecommunications the assets amounted to 7.1 trillion yuan, 33.3 per cent of the total capital or up 6 percentage points from that of 27.3 per cent in 1998.

The economic returns of the SOEs witnessed great increase and the total amount of national capital kept stable growth. Since the powerful return of the SOEs' economic results in 1999, it set a best historic record for four consecutive years by the end of 2003. The total amount of profits gained by SOEs reached 495.12 billion yuan; the annual profit increase rate of SOEs between 1998 and 2003 hit 44.2 per cent. The economic returns of SOEs maintained rapid growth, ensuring the stable increase of SOEs' total capital. The amount of SOEs' capital in 2003 reached 7.04572 trillion yuan by the end of 2003, realizing an average increase rate of 8 per cent between 1998 and 2003.

Although the economic returns of SOEs have been setting the historic records, there have still existed many problems in benefit increase, which needs to pay high attention to. First, there are still a large number of enterprises running in red/under deficit in China; secondly, the benefit increase is not balanced with a great deal of profits concentrating on a small number of large-scale SOEs; lastly, the benefits of some small-and-medium-sized SOEs engaging in general competitive industries are rather low.

By People's Daily Online