Q: Many people believe that the root cause of the slow progress of SOE reform is the backward State assets management system. Is this true? China is now trying to intensify the reform of State assets management. What is the goal of the reform?

A: Just as you mentioned, SOEs still have a long way to go to establish a modern corporate system. One root problem is the retardant reform of the State assets management system.

For example, the State's supervisory role as owner isn't being fulfilled. And too many departments manage State assets. The government's function as administrator of public affairs and its function as an investor have not been clearly defined. The management of State assets is scattered among several government departments, resulting in disintegration of rights, duties and responsibilities.

The aim of the State assets management reform is to improve the performance of SOEs, adjust national economic distribution and structure and guarantee increase in the value of State assets.

In order to achieve such a goal, China has decided to set up State assets supervision agencies within the central government and local governments at provincial and prefecture levels and decided on the following four reform principles:
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First, separating the government's function as public affairs administrator from its function as owner of State assets. As administrator of public affairs, the government's major functions are to regulate economy, supervise market, manage social affairs and provide public services. State assets supervision agencies will shoulder the responsibility of supervising and managing State assets.
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Second, separating government from enterprise, and ownership from management. State assets supervision agencies are authorized to supervise the management of State assets, protect the legal rights and interests of owners. It should also protect the enterprises' legal l rights and interests as market players. The agencies, however, are not allowed to interfere in enterprises' production and management activities
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Third, integrating rights, duties and responsibilities and combining management of assets, personnel and major operations. This is a principle in forming State assets supervision agencies, as well as an important part of the state assets management reform.

Fourth, under the precondition of State ownership, the central and local governments will represent the state to supervise the management of State assets.
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It is expected China will set up a relatively mature mechanism for the management, supervision and operation of State assets by 2010.

The Intermediate People's Court of Changchun City, Jilin Province holds an open trial of Qi Kuifan, former Deputy Manager of the Changchun Municipal Grain and Oil Supply Corp., for defalcation and bribery. The government lays stress on cracking down on on-the-job crimes.