Golden year for economy

PUBLISHED : Sunday, 02 March, 1997, 12:00am
UPDATED : Sunday, 02 March, 1997, 12:00am

PREMIER Li Peng spoke of a golden economic performance in his annual work report.

The domestic economy grew at 9.7 per cent, nearly two per cent higher than planned, while inflation dropped from 14.8 per cent to 6.1 per cent, far lower than the target set 12 months ago.

The nation had a record grain harvest, piled up foreign exchange reserves at more than US$100 billion (HK$773 billion), another record, increased foreign trade by 3.2 per cent and garnered US$40 billion in foreign investment.

In the countryside, Mr Li said rural incomes jumped by nine per cent in real terms, the biggest increase in recent years, compared with a rise of 3.3 per cent registered by the urban population.

Average urban incomes at 4,300 yuan a month are still more than twice those calculated for the peasantry, but Mr Li admitted urban unemployment had risen but did not give a figure.

In the year ahead, he promised to reduce the economic growth rate to eight per cent but to lift the investment rate in fixed assets from 18.2 per cent to 32 per cent.

The beneficiaries will still be sectors such as agriculture, water conservancy, infrastructure and pillar industries. Central and western regions are to win more investment after obtaining a 42 per cent share of investment in 1995.

The central policy plank of this year is the reform of state-owned enterprises, which Mr Li described as a 'pressing task'. The number of large enterprises that will plunge into experiments aimed at pulling them out of the red is to increase from 300 to 511, and 120 enterprise groups are to try out various reforms.

More leeway will be given to the 240,000 smaller state-owned enterprises which will be given the freedom to be leased out, merged, sold off or privatised.

'We should take the initiative to accelerate and standardise the reform aimed at establishing a joint stock system in enterprises,' the report said.

Mr Li also outlined plans to enable banks to turn outstanding debts owed by state enterprises into 'state capital funds'.

The first sectors to be allowed to write off their debts are the coal, water conservancy, hydro power and military industries.

Larger enterprises will be permitted to raise funds by issuing stocks and convertible funds and to persuade local governments to supply them with capital loans.

Mr Li talked broadly of fostering better and more efficient management in these enterprises and of 'vigorously' promoting the creation of a social security system.