Move to float more state enterprises

Beijing is to float more large-scale state enterprises on the stock market, a top level conference has decided.

Speeding up the reform of enterprises by converting them into shareholding companies was a key issue at top-level meeting which ended this week at the resort of Beidaihe.

A source close to the conclave said more large-scale state-owned enterprises would be listed on the nation's two stock exchanges in the coming year.

He said the idea was to use the people's vast savings to resuscitate the enterprises, which have piled up unprecedented losses this year.

'After acquiring stakes in state companies, ordinary citizens will become their supervisors and quality controllers.' the source said. 'Efficiency should go up very soon.' When the yuan becomes convertible in a few years, foreign companies will be allowed to buy more shares in Chinese concerns.

Foreign capital will particularly be sought for the modernisation of old plants.

However, the leadership has yet to decide on the minimum percentage of shares in a company that must remain in the hands of the central Government.

Certain factories, mines and installations, deemed to be of strategic value, will remain under state control.

It is understood Executive Vice-Premier Zhu Rongji has changed his mind concerning the pace of the development of the 'stock economy'.

Until early this year, the economic tsar had urged a very cautious approach in allowing state companies to be listed on bourses.

At the Beidaihe conference, however, Mr Zhu, considered a neo-conservative, agreed to 'push the enterprises to the marketplace'.

The Politburo also agreed that the reform of state enterprises must achieve 'a breakthrough and a comprehensive progress' in the near term. Financial analysts said the recent bull run in Chinese stocks reflected brokers' awareness of the leadership's change of policy.

Meanwhile, the semi-official Hong Kong China News Agency reported yesterday that the northeastern provinces would embark on an aggressive plan to seek foreign capital.

In the period 1996-2000, Liaoning will be after US$10 billion (HK$77.3 billion) for the technological transformation of its enterprises, Jilin will seek US$4 billion and Heilongjiang wants US$2.5 billion.

The Chinese media said yesterday a 'new wave of the open door policy' was being unleashed.