Premier Zhu Rongji on Monday urged China's securities watchdog to
develop fresh measures to continue the sell-off of state-owned
shares.
At
a conference in Beijing, he said: "It's an urgent task for the
China Securities Regulatory Commission and part of the cash
earnings from sales will be continuously used to enrich the
social-security reserve."
Zhu said the recent suspension of the sale of state-owned shares
was due to pricing and selling methods, which caused consecutive
falls on the stock market.
In
June this year, the commission announced a plan under which
domestic firms would be required to sell their shares in
state-owned enterprises. The proceeds were to go to a national
social-security fund.
However, the plan to sell off state shares produced more negative
effects than expected, according to a senior researcher with the
State Information Centre under the State Development Planning
Commission.
The researcher, who refused to be identified, said: "The
unreasonable pricing and selling methods were the main reasons."
State shareholders usually received state shares for 1.5 yuan (18
US cents) or so, while the public shareholders had to pay between
25 and 30 times that price to buy state shares, according to the
plan announced in June.
The regulators realized that the sale of state shares was having an
adverse effect and they suspended the plan on October 22.
Zhu said: "We will not stop the reduction and sale (of state
shares) because that is a channel for the central government to
contribute to the social-security fund. "Securities regulators
should think of unveiling detailed measures and, at the same time,
ensure market stability."
Zhu took his decision taking into account the unfavourable world
economic situation.
The global recession will affect China's economy and this, in turn,
will bring pressure on the state's social-security system, which
relies mainly on the state's tax income, according to Zhu.
He
made the remarks at a three-day conference of the National Council
for the Social-Security Fund, a high-ranking body set up in
September to operate the fund.
The fund derives partly from the proceeds of sold state shares as
well as money allocated by the central government.
The main component of the social-security fund still comes from
employees and their employers.
(China
Daily December 18, 2001)