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Sufficiently reducing the number of State-owned enterprises (SOEs) and making the remainder stronger and more competitive is one of the dominant reform themes for China's economic restructuring over the next few years.
The government should closely monitor sales of State-owned assets in a new round of large-scale State asset restructuring.
And sound property markets should be set up to avoid losses of State assets during the transactions.
These recommendations were made by senior officials and researchers at a weekend forum on State asset management reform, organized by the Economic Daily and Economic Research Center under the former State Economic and Trade Commission (SETC), which has become part of the newly-formed Ministry of Commerce.
They did not reveal details of the process of forming the State Asset Management Commission (SAMC), one of several new government organizations which were decided to be established at the annual session of the 10th National People's Congress earlier this month.
"As far as I know, the commission's personnel has been decided and it will start operating soon," said Feng Bing, economist and editor-in-chief of the Economic Daily.
Statistics show China has about 190,000 SOEs and more than 10 trillion yuan (US$1.2 trillion) worth of assets.
Li Chunman, deputy director of the Department of Enterprises Management under the Ministry of Finance, stressed that the State sector was essential to China's economy.
"The point I want to add is that the State-owned economy, though created in the planned economy, has its own role historically and currently," said Li.
During the planned economy period, China accumulated large State assets and for a long time, "the more State economy, the more advantageous China is" was the dominating logic among policy-makers.
And now, the central government will continuously perform the functions as investor in large SOEs, infrastructure and important natural resources that have a vital bearing on the national economy and State security, while local governments should represent the State's performing functions as investors with regard to other property.
The officials and researchers attending the forum warned the reform may result in huge losses of State assets if strict supervision and proper policy implementation are not guaranteed.
Cases of selling State assets at unreasonably low prices have occurred in the past due to lax controls, under-the-counter or insider deals and because of a lack of market experience, they said.
Recently, the transferring of shares of listed SOEs or of management buy-outs has increased, but in many cases the State's shares were under sold.
They warned that some local governments or SOEs could take advantage of the supervision vacuum during the establishment of the SAMC to sell State assets for personal gains.
The central government should stipulate a set of unified and practical rules for the sale of State assets and local governments should suspend all large-scale transactions before the issue of the rules, said Li.
Li also said the government should spare no time in creating strong property markets. All transactions involving State assets should be conducted on the markets.
To sell State assets on the property market could help attract foreign and private capital into the restructuring of SOEs, prevent corruption and protect State assets from being drained, said Chen Huai, a senior researcher with the State Council Development Research Centre.
To set up a well-established property exchange platform is the institutional prerequisite for putting State asset transactions on the market, Chen added.
(China Daily March 26, 2003)
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