Critics have suggested that SOEs be privatised to ensure fair competition in the market.

The debate on privatising SOEs intensified in February when the World Bank released a report suggesting that China's banking sector be privatised and calling for preferential policies for private companies to ensure fairer competition.

Earlier this month, Premier Wen Jiabao even openly criticised big state-owned banks for profiting from their oligopoly positions.

But other critics said the World Bank's suggestion would ruin the economy, that the country should still stick to a publicly-owned economy, and that ending the monopolies of SOEs did not necessarily mean privatisation.

Speaking at the company's party meeting, Lin said China should establish an SOE system with Chinese characteristics.

'In this new era, there are two important forces supporting the foundations of the ruling party. One is having the people's army, and one is maintaining the state-owned part of the economy,' Lin was quoted by the Nanjing Daily's online news portal as saying.

Lin said that those advocating the privatisation of SOEs and the merger of government and business functions in SOEs - the case in the days of the planned economy - had ill intentions. 'The intention of both suggestions is to cause the collapse of the SOEs,' Lin was quoted as saying.

He said SOEs should be vigilant about the 'conspiracy' in the international community to overturn China's socialist development path.

'The two misconceptions have gained international support. Some international enemies want to use these two misconceptions to bring about the collapse of the state-owned economy,' he said.

'When the state-owned economy has collapsed, the enemies will then seek the army's collapse. Privatising the economy and taking away the party's control of the army by nationalising the military are conspiracies by international enemies to shake the base of the ruling party.'

Meanwhile, a commentary published yesterday in the People's Daily criticised countries in the West for singling out Chinese SOEs in trade disputes. The author said SOEs had no monopolistic privileges under Chinese law, and accused countries of protectionism in denying them access to markets.

Dr Shen Jianguang , chief Asia economist at Mizuho Securities Asia, noted that some arms makers in overseas countries were not state-owned, but he said there would be resistance to the reforming of SOEs in China.

'SOEs in China are also under pressure to make profits. Allowing more market access would certainly affect their profitability,' he said.