Xinhua : Chinese State Firms in Strategic Reshuffle

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Chinese State Firms in Strategic Reshuffle

BEIJING, September 21 (Xinhua) -- China is busy carrying out strategic
reshuffling of state-owned enterprises to revitalize these firms mired
in difficulties and trim down the over-sized state sector.  Under the
ambitious program, China will focus the state sector on strategic and
key industries instrumental to the country's national interests and
overall economic strength.  Efforts are to be made to support the
development of hundreds of major enterprise groups that controls the
lifeline of the national economy.  In the past 50 years, the state-owned
sector saw rapid growth, and a complete industrial system now has been
established.  But shortcomings still exist in the structure,
distribution and mechanisms of the state sector - and state firms- are
now blamed for irrational structure and lack of competitiveness. 
Statistics from the Ministry of Finance show that the country's 238,000
state firms cover nearly every field.  With poorly concentrated funds
and efforts, these firms have failed to do the job which should be done
by the government.  The repetition of construction and redundancy also
hindered the development of the state sector.  The low-level duplication
of construction caused high inventories, forcing China to import large
quantities of high value-added products every year.  Compared with
world-renowned enterprises, China's firms are generally small in size,
and the country's three largest auto producers now produce only 33.6
percent of the vehicles in the country.  Economic insiders point out
that the strategic reshuffle will not weaken the state sector, but
rather concentrate limited state funds in the areas of real need. 
Experts suggest that the state firms play a controlling role in economic
fields touching upon national security and social stability, and
maintain a dominant role in infrastructure and vital basic industries. 
In the backbone industries, such as machinery, electronics and
petrochemicals, China should support a group of large conglomerates to
promote the competitiveness of China's economy in the world economy,
according to some experts.  The reshuffle of the state sector does not
mean selling off all the firms, says one high-ranking official.  He
blames the practice of "selling state firms out" in some areas as the
reason for the loss of state assets and arrears of debt, encroaching on
the interests of their employees.  This tendency has been curbed under
the guidance of policies adopted by the central government.  Experts
agree that property transactions must be made in accordance with a
complete legal system, adding that China now lacks such a system. 
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