Reform to be top priority, says Beijing

PUBLISHED : Wednesday, 21 December, 1994, 12:00am
UPDATED : Wednesday, 21 December, 1994, 12:00am

CHINA would go ahead with the controversial enterprise reforms and expected to achieve 'substantial progress' next year, a senior Chinese government official said yesterday.


The reforms, which were reportedly toned down significantly for fear of triggering massive social unrest, are aimed at turning China's socialist state enterprises into market-oriented businesses.


Speaking at the opening of a four-day national working conference on economic reform, State Councillor Li Tieying said enterprise reforms would remain a top priority next year.


To supplement the reforms, Mr Li said the Government would strive to 'establish a social security system, develop the market mechanism and improve the functions of the Government'.


While Mr Li, who is also the minister in charge of the State Commission for Restructuring the Economy, did not give details of the reform, he said enterprises would be given all the legal rights of management.


'The Government will seek ways to make suitable arrangements for excess workers while tackling the problem of the historic debt burden born by companies,' Mr Li was quoted by Xinhua (the New China News Agency) as saying.


'Approaches to superannuation and unemployment benefits will also be made while housing reforms will be strengthened,' he added.


Mr Li made it clear that such reform would proceed cautiously and trial experiments would be carried out before the policies are extended in the country.


And he indicated that the state would allow the more than 66,000 small enterprises to shake off state control through leasing, auctions and forming shareholding companies.


Foreign economists have pointed out that one major obstacle hindering Beijing's enterprise reform plan is the social chaos that would follow if the state closed down all loss-making enterprises.


Mr Li admitted that because of the poor performance of state enterprises, the living standards of some workers had actually dropped over the past year.


But he said that China would go ahead with its reform plan next year.


Mr Li said the fact China was able to maintain a sound economy was a result of the speed of the country's reform process.


'The key to solve these problems lies in deepening reform,' Mr Li said.


Although reforms would be accelerated next year, Mr Li stressed the Government would continue to maintain a close check on the supply of basic staple goods to make sure that prices do not fluctuate too dramatically in the future.


'Next year, we must seek to stabilise demand, increase market supply and smooth the distribution channel to readjust the supply and demand relationship to further suppress inflation,' Mr Li was quoted as saying by the China News Service.


According to Mr Li, China's gross national product this year is expected to reach 11 per cent.