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China will speed up reforms - by implementing legislation and introducing private investors into state-owned enterprises (SOEs) - in the nation's asset-management system.
A diverse shareholding system must be implemented in SOEs to ensure they become more efficient, Vice-Premier Huang Ju said on February 24 during a national working conference on state-asset management. The sales and/or transfer of state holdings will be sped up.
China will also introduce legislation - a law is now being drafted on the management of state-owned assets, he said.
Outdated laws and regulations will be amended, he added.
Several regulations - including one that details guidelines on authorized management of state-owned assets and another that sets salary standards for executives - will be introduced in the near future.
State-owned Assets Supervision and Administration Commission (SASAC) and Ministry of Finance officials are developing a budget system that will clarify the liabilities of anyone who manages State-owned assets, SASAC Chairman Li Rongrong said.
That, he added, will make asset supervision easier.
To catch up with changes that resulted from market-oriented reforms, China last year began to implement a state-owned assets management scheme.
SASAC was established in April. That marked the first Chinese special agency to supervise state-owned assets.
SASAC has been overseeing assets in the largest and central SOEs. Local supervisory bodies were created to oversee state assets in local enterprises.
Twelve municipalities and provinces have launched such agencies to date, Li said.
Other provinces and cities are expected to do so within six months.
Tianjin, a port city in northern China that controls more than 150 billion yuan (US$18.1 billion) worth of state assets, plans to launch its supervisory bureau next month, said Vice-Mayor Yang Dongliang.
That will mark a new beginning in SOE reform in the city, but it will take time for the asset management system to function well, the vice-mayor said.
Entrepreneurs and government officials will need time to accept and understand the new concepts, he added.
Restructuring has helped China's SOEs become more efficient and profitable.
Ministry of Finance statistics indicate sales revenues of China's SOEs grew 23.6 percent last year, and combined profit grew 21 percent.
The firms must still tackle many problems if they are going to survive in the pending market competition, experts said.
Many SOEs must still establish their boards of directors and recruit good managers and independent directors, Li said.
An increasing number of central SOEs will do so this year, he added.
Some high-tech companies and research institutes will be allowed to adopt incentives such as stock options.
Apart from a few military enterprises, most big SOEs will be encouraged to introduce private investors, especially overseas strategic investors, into their operations.
More SOEs will list overseas, Li said.
He did not explain when or how the state's massive holdings in domestically listed companies will be floated in the market.
Authorities have not found a widely accepted model for circulating the assets, a China Securities Regulatory Commission official said Tuesday. But others doubt whether one or two models could fit the various conditions across the vast country.
(China Daily February 25, 2004)
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