Privatisation to be done through national market

PUBLISHED : Sunday, 31 August, 2003, 12:00am
UPDATED : Sunday, 31 August, 2003, 12:00am

A national trading market for state assets will be created to help regulate the massive sell-off of resources by local governments, according to officials from the State Assets Management Commission.

Speaking at the China Mayors Forum yesterday, Shao Ning, vice-chairman of the commission, said he hoped all dealings in state assets - such as sales and takeovers of state enterprises - would eventually be conducted in the market.

Cities such as Shanghai and Shenzhen already require that state assets be sold in municipal versions of the market, where transactions are required to follow proper procedures so that transparency is guaranteed.

Commission officials said they were alarmed by the drain of resources taking place as some local governments sold off state assets at low prices. In some cases, there are concerns that the practice is driven by corruption, with government officials getting kickbacks in return for selling assets far below their market value.

'The drain is pretty serious,' said Ji Xiaonan, director of the asset management commission's research office, adding that some local governments still dealt outside proper state-assets-trading markets despite a warning from the Communist Party's Central Commission for Discipline Inspection.

Commission officials said the privatisation of state enterprises at reasonable prices should be encouraged.

Zhang Delin, head of the commission's regulation bureau, said research was being carried out to determine rules for the national market, but she refused to give details about the nature of the rules or when they would be adopted.

The central government set up the asset management commission in March to oversee 196 top state enterprises with combined assets of 7 trillion yuan (HK$6.6 trillion).

However, months before the body was formally established, local officials began a privatisation spree of assets under their control. The government has said it also intends to establish provincial asset management commissions.