China to institute a responsibility system for major decision-making errors

Wang Xi, deputy director of the Performance Evaluation Department under the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), announced on Jan. 18 in Beijing that the SASAC plans to institute a Responsibility System for Major Decision¨CMaking Errors by SOEs within the year 2005, under which the relevant officials who made wrong decisions that cause huge losses will possibly be subject to the punishment of dismissal.

According to Wang, in enterprises where the board of directors has been established, the board shall be held responsible for the losses incurred by the wrong decision made in SOEs; and the level of managers shall be held responsible for the decision error made in enterprises where the board of directors has not been set up. The responsibilities to be borne not only include economic penalty, but more importantly, the change in official posts made in accordance with relevant regulations formulated for this purpose. Those officials whose errors result in serious consequences will likely get the sack.

An official with the SASAC noted that failure in implementing the responsibility system for business operation is an important reason for low business efficiency in SOEs. A restraint and incentive mechanism for the management of state-owned assets has not been really set up, and there generally exist the problems that enterprise officials are appointed without a definite term of office, or no target is set for them during their tenure of office, or no assessment of fulfillment of the target is made, or the assessment is disconnected with rewards and punishments, and what not.

In 2004, the SASAC signed the Business Performance Responsibility Document with officials from 187 central enterprises, the work of evaluating the business performance of central enterprise officials has been in full swing. The Responsibility System for Major Decision-Making Errors by SOEs to be soon published is directed mainly at the 187 central enterprises, and the decision-making responsibility ascertainment system for local SOEs remains to be formulated by branches of SASAC in various places according to local conditions, added Wang.

By People's Daily Online