Sichuan to go for broke
SICHUAN plans to select two or three beleaguered state-owned enterprises and declare them bankrupt this year.
Provincial governor Xiao Yang said that the move would cost at least 3,000 jobs.
Mr Xiao, attending the third session of the eighth National People's Congress, said that the proposed bankruptcies would push the province's unemployment rate to about six per cent this year.
Mr Xiao said that the assets involved in the bankruptcies amounted to between 100 million yuan (about HK$91.71 million) and 200 million yuan and they were involved in processing industry.
'It is a gradual progress for the loss-making enterprises to go bankrupt,' he said.
The bankruptcy programme for state-owned enterprises was formulated to suit each place's needs.
The State Economic and Trade Commission selected 18 pilot cities for the programme, in each of which two or three state enterprises would be permitted to be declared bankrupt.
The numbers and types of enterprises selected would be determined according to the economic situation of each city.
The People's Bank of China (PBOC) has allocated 15 billion yuan, up from seven billion yuan, to state banks to settle bad debts owed to them by the enterprises.
Mr Xiao said that the bad debts would be offset by the application of the funds on a case-by-case basis.
Premier Li Peng said that the reform of enterprises was one of the government's main tasks this year.
His report said that enterprises that had made losses for a long time and failed to repay debts would be allowed to declare bankruptcy.
As part of the reform, a social security system for the elderly and unemployment insurance would be focused upon.
It was proposed that the unemployment insurance funds be managed under a unified programme, and contributions to the social security system for the elderly be made by employers and individual workers.