The central government will change its policy of subsidizing State
enterprises to comply with World Trade Organization (WTO) rules, a
senior government official said yesterday.
"The government is studying how best to modify the current policy
of paying interest on bank loans for technology upgrades of State
enterprises," said Shi Dinghuan, secretary-general of the Ministry of Science
and Technology. "The subsidies would easily lead to unfair
competition, which is a taboo for the WTO and must be
reconsidered."
The official said the government is trying to find a fairer and
appropriate way of subsidizing the interest on such loans so as to
make State enterprises more competitive.
In
1999 and 2000, China spent 19.5 billion yuan (US$2.4 billion)
covering the interest on loans for technological upgrades. The
money was raised from treasury bonds. Industries including textile,
petrochemical, machinery and non-ferrous metal have enjoyed the
discounted loans.
Shi declined to say whether tweaking the policy would lead to
reduced subsidies or their abolishment.
But Xie Xuren, vice-minister of the State
Economic and Trade Commission, said the government would
"continue to expand the scope of loans and subsidies for technology
innovation."
"The government will give subsidies to those key profit-making
products, enterprises and industries needed in the market," Xie
said.
The vice-minister said such a programme has played an important
role in China in the last two years.
Sun Zhenyu, vice-minister of foreign trade and economic
co-operation, said China's exports of high-tech products expanded
this year, amid the slowdown of the world high-tech industry.
(China
Daily November 16, 2001)