Economic answers

PUBLISHED : Sunday, 16 January, 2000, 12:00am
UPDATED : Sunday, 16 January, 2000, 12:00am

Recently China's State Development Planning Commission minister Zeng Peiyan announced that 'private enterprises in China will be put on equal footing with state-owned enterprises. Restrictive and discriminatory regulations towards private enterprises will be eliminated'.

This decree, if put into practice quickly, will see China's GDP per capita leap-frog that of most nations in the world and match the elite league of G7 nations within 10 years, if not sooner.

It is important, however, that the definition of 'private enterprises' in the above statement does not mean 'Chinese (whether mainland or overseas) owned' only.

It can only be through the help of foreign capital and expertise, in particular those of multi-national companies, that the mainland's economy can progress quickly.

One priority that the mainland needs to work on is to set up a proper and efficient legal mechanism to legislate its commercial laws and regulations. At present, new commercial laws and regulations tend to materialise out of the blue from the central Government.

Setting up a proper consultation mechanism for such a commercial law legislature would go a long way towards reinforcing investors' confidence in China.

Regarding the solution of the state-owned enterprises (SOEs), even with no protection, some strong ones will actually thrive in a free market condition; others can survive by finding the right foreign partner and accepting modern management.

Temporarily, unemployment will increase, but in the long term, if Beijing can forget the word 'protection', lower its tariffs, and make the renminbi fully convertible, unemployment will soon disappear.

How could all this sit well with Marxist ideology? The central Government can solve this problem by distributing 30 to 50 per cent of the SOEs' shares to their present and past employees. These shares will be worth a lot one day, when the SOEs are not run by state bureaucrats, but by capable managers.

By distributing SOE shares to employees, not only will it make the SOEs work well, but it would also adhere to Marx's preaching that ownership should go to the ordinary people (the proletariat).

ALEX WOO Tsim Sha Tsui