Rivalry slows plan for reform

PUBLISHED : Friday, 22 December, 1995, 12:00am
UPDATED : Friday, 22 December, 1995, 12:00am

FIERCE competition among state ministries and local governments has delayed the central Government's new plan to reform state enterprises.

The new move is to target 1,000 state enterprises to be given government credit and sales support.

Because of tight budgets, Chinese leaders reached a consensus this year that reform should proceed 'to grasp the large ones and let the small ones go'.

In other words, the Government will concentrate resources on the 1,000 large enterprises while subsidies to medium and small state enterprises will be stopped.

Moreover, loss-making enterprises will have to fight for their survival and some may have to resort to leasing, mergers, reorganisation and even liquidation.

Such reform ideas have so far met strong opposition from the enterprises, local authorities and government ministries.

'The priority guideline in selecting the 1,000 large enterprises was first the amount of capital investment [they have invested] followed by the number of their employees,' said an official at the State Commission for Restructuring the Economic System.

'However, the selection process has been difficult as local government and ministries are not willing to shoulder burdens for the enterprises.' They wanted to delay the plan, he said, and if that was unsuccessful, they wanted to ensure their enterprises reached the list of 1,000.

Those likely to be given priority were car companies, oil refineries and energy concerns.

At present, 100 national enterprises and 2,000 local enterprises have been chosen by authorities and local governments for a pilot scheme of state enterprise reform.

The pilot scheme is due to be completed by the end of next year.

Although reform is to be one of the Government's priorities in the Ninth Five-Year Plan (1996-2000), the lack of resources and the fear of mass unemployment has left plans in limbo.

Informed sources said central revenue could not reach its target this year and was expected to account for less than 15 per cent of the national total.

'The national budget will still be in serious deficit next year and it was already decided that national expense and banks' credit would be tight next year,' one source said.

'The state will no longer be able to support enterprises that are losing money.' Although there are various welfare schemes run by different ministries, China lacks a comprehensive social security system that can take care of workers displaced by bankrupt or inefficient enterprises.

'The central Government did not have enough money to unify the various social security schemes implemented by different state departments,' the source added.

Limited social security schemes are now administered separately by ministries such as the Ministry of Personnel, the Ministry of Labour, the Ministry of Civil Affairs and the State Economic and Trade Commission.