The city of Dalian in northeastern China aims to raise US$500 million to $600 million by offering foreign investors an interest in more than 200 potential joint ventures involved in computers, chemicals, food and infrastructure.
Vice-director of the city's economic committee, Zhang Jixian , said about 50 state-owned enterprises were involved in the projects.
'These enterprises need funds to reform and improve operations,' he said.
The majority of Dalian's state-owned enterprises, with assets worth a total of 27 billion yuan (about HK$24.84 billion), are highly indebted.
There are about 100 large and medium-sized enterprises and the latter are on average burdened with debt of about 500 million yuan each.
The city aims to declare 21 mainly small and medium-sized enterprises bankrupt this year, and to sell their assets to foreign or local investors. The enterprises are responsible for total losses of at least 700 million yuan.
Three Dalian enterprises were declared bankrupt in 1995, Mr Zhang said.
The vice-director of the Dalian economic system reform committee, Li Yuanshan , said it was difficult for Dalian companies to absorb the assets of bankrupt state enterprises, as austerity measures had driven many to the wall.
Unless state-owned enterprises were involved in projects supported by Beijing, funding from the central government was hard to obtain.
'These enterprises can only apply for short-term loans from local banks,' Mr Li said.
He said that in the first batch of 300 enterprises seeking central government funding this year, only seven were from Dalian.
Mr Zhang said there were 5,720 foreign-funded enterprises in the city, accounting for more than US$10 billion worth of contracts.
In the first half of the year, 614 new foreign-funded projects, representing US$1.86 billion worth of contracts were recorded.
They represented increases of 56.5 per cent and 194 per cent compared to the same period in 1995.
Mr Zhang said the machinery, computer and petrochemical sectors would be the city's main economic pillars.