Zhu Rongji

Radical economic surgery rejected

PUBLISHED : Wednesday, 03 August, 1994, 12:00am
UPDATED : Wednesday, 03 August, 1994, 12:00am

DRAFTERS of the document to be tabled at the forthcoming Fourth Plenum of the Central Committee have decided to eschew radical surgery in tackling economic problems such as state enterprises.

The plenum is expected to recommend ''micro-economic reform'', a euphemism for changes that will not disrupt the state sector-dominated system.

Details of the document, which will guide economic reform in the mid-1990s, are being debated at the continuing series of high-level meetings at the North China seaside resort of Beidaihe.

The meetings will last through this month, and senior officials, including Vice-Premier Zhu Rongji, are expected to divide their time between Beijing and Beidaihe.

Economic analysts said although drafts of the document would be revised to take into account the views of participants in the Beidaihe meetings, the theme and emphasis had been set by economic tsar Mr Zhu earlier this month.

In private meetings, Mr Zhu said reform next year would concentrate on improving state enterprises ''through building up a modern enterprise system and through modernising the management mechanisms''.

Under the premise of the retention of state ownership and overall government supervision, enterprises will be given more autonomous powers to operate with market forces.

The plenum will unveil a social insurance system with contributions from the central Government, localities and workers.

However, macro-economic or deep-seated changes such as privatisation through means including converting state enterprises into shareholding companies would not be tried out on a large scale.

Only a very limited number of large and medium-sized enterprises would be declared bankrupt.

The Vice-Premier also indicated there would be no major macro-level reforms for other sectors from now until mid-1995.

Mr Zhu and his advisers have pointed out that extensive reforms in the areas of finance, foreign exchange, foreign trade, prices and investments had been implemented in early 1993.

They admitted time was needed to absorb the shocks.

The plenum document is being drafted by a team that reports to Vice-Premier Zhu and President Jiang Zemin.

The document will point out that fighting inflation remains a key task, while Beijing must continue to rein in fixed-assets investments by local governments.

Representatives of localities and enterprises are expected to lobby Beijing on the need to rescue the depressed stock markets.