State-run firms win concessions
BEIJING has succumbed to tough lobbying by the state sector and scaled down plans to overhaul chronically unprofitable government enterprises.
Executive Vice-Premier Zhu Rongji has also encountered stiff resistance to his plans to change the ownership system of public-sector firms.
In speeches to delegates attending the National People's Congress (NPC) yesterday, Prime Minister Li Peng concentrated on shoring up ailing state-sector units instead of radical surgery, such as transforming them into quasi-private shareholding concerns.
And despite the Government's just-announced measures to fight inflation by controlling money supply, the People's Bank of China yesterday announced new loans to bolster the depressed coal, metal and electricity industries.
While addressing NPC members from northeastern Jilin province yesterday, Mr Li hinted more government funds should be earmarked to prop up state companies.
''The Government must ensure a beneficial external environment for enterprises and help them transform their management mechanism,'' Xinhua (the New China News Agency) last night quoted Mr Li as saying.
The premier urged various levels of government to help boost the competitiveness of large and medium-sized state enterprises.
Chinese economists said Mr Li was in effect asking that more investment be pumped into the chronically inefficient state sector.
Vice-Premier Mr Zhu also recommended prudence in ''pushing [state] enterprises towards the marketplace''.
While talking to deputies from Hunan province yesterday, Mr Zhu expressed more determination that Mr Li over restructuring the state sector.
''Do not link the existing difficulties of state-owned enterprises with the reforms of today,'' Mr Zhu said.
He admitted, however, that it would be unrealistic to expect the problem of public-sector inefficiency to be solved soon.
''Of course, the central authorities will still adopt practical measures to solve the question of the historical burden of the state sector,'' Mr Zhu said, hinting that Beijing was not about to cut its grants to public-sector companies, which will come up to 16.63 billion yuan (HK$14.77 billion) this year.
In an earlier talk to Hunan delegates, Mr Zhu also indicated large-scale bankruptcies for government-run business units, which had been advocated by liberal economists, were not a practical solution.
The Chinese-run Hong Kong daily, Wen Wei Po, yesterday quoted Mr Zhu as saying ''we don't have a mechanism for bankruptcies at this stage''.
Mr Zhu said each county should not have more than one bankruptcy because ''bankruptcies do not mean we can stop taking care of the [laid-off] workers''.
But the Vice-Premier stressed that Beijing must push ahead with experiments in ''changing the ownership system of government enterprises'', a euphemism for quasi-privatisation.
Chinese sources said yesterday central planners including conservative elder Chen Yun had recently insisted that public-sector firms remain the mainstay of the economy lest the socialist nature of China be adulterated.
Meanwhile, the People's Bank of China's vice-governor, Zhou Zhengqing, indicated yesterday the central bank had made preparations to release new loans to bail out factories and mines in the coal, metal and electricity sectors.
Mr Zhou hinted Beijing had been forced to tone down its just-announced policy of fiscal conservatism because enterprises in these three areas had been snarled in ''triangular debts'' (debts enterprises owe each other).
''Controlling the volume of credit does not mean a tight-money policy,'' Mr Zhou said.
''We must provide support for major parts [of the economy].'' Analysts said aside from ideology, Beijing had shelved plans to privatise enterprises for fear of rising unemployment. Official figures said a record 900,000 workers were laid off last year.