Xinhua News Agency

State companies urged to pull out

PUBLISHED : Thursday, 09 November, 2000, 12:00am
UPDATED : Thursday, 09 November, 2000, 12:00am

State firms should withdraw from most mainland industries, a research report by the National Bureau of Statistics recommends.

The report identified 196 industries and said state firms should withdraw from 146 of them, Xinhua reported. Of the remaining 50, the state should keep 'control' of 35 and a 'monopoly' in 15.

The Shanghai-based China Securities newspaper said the 35 industries over which the state should maintain control could be grouped into three categories: mining, including coal and minerals; hi-tech businesses like aerospace that could have a direct bearing on the country's competitiveness; and 'pillar industries' such as cars, electronics and petrochemicals.

The report said industries from which the state could withdraw gradually were those which were not capital or technology-intensive, such as textiles, food and beverages, and home appliances.

It explained that companies in these lines of business could improve through market competition. Defence and electricity would both remain state monopolies.

The National People's Congress passed a constitutional amendment in March last year affirming the role of the private sector in the economy. The amendment followed a decision made by the Communist Party congress in late 1998.

Foreign economists have said that the concession by the Communist Party, which technically still claims to be a party of the proletariat, is already a done deed.

They pointed out that after two decades of economic reforms, state firms had lost much of their superiority in most businesses.

Huge privately owned companies and joint ventures with international firms had taken control of more than half of the economy on the mainland.

Despite their steady decline, state firms often still enjoy advantages over private businesses in areas such as obtaining bank loans.