The severity of the losses at China's state-owned enterprises and a continuous decline in exports has prompted the mainland's central bank to devote more resources to its better enterprises and exporters. The move is seen by at least one economist in Beijing as a step backwards in China's economic reform programme because it is a repeat of the sort of administrative measures the government had employed under the centrally planned economy management. The People's Bank of China (PBOC) last night announced financial measures through Xinhua (the New China News Agency) aimed at providing more capital to state-owned enterprises (SOEs), to boost their exports and sales and lower their interest burdens. The State Economic Commission under the State Council said the 400,000 SOEs in China reported a net loss of 3.4 billion yuan (about HK$3.16 billion) in the first quarter, the first deficit since Deng Xiaoping launched market reforms 17 years ago. The PBOC said the country would 'relatively concentrate' the country's money supply to support key enterprises and meet their 'reasonable capital demand'. The central bank asked the commercial banks to provide working capital to large and medium-sized SOEs whose products had markets, which were healthy, and were able to repay debt. The PBOC would boost the flow of internal commodities and exports by helping enterprises sell their products and enlarge their sales networks. The central bank asked the banking sector to support SOEs to set up groups or conglomerates in order to streamline their operation and lend more or provide credits to large and medium-sized SOEs to upgrade technological levels. It said the banking sector would be responsible for helping SOEs restructure to lower their debts and to provide funding to change production lines, enlarge capital or help them to avoid bankruptcy. State enterprises racked up 88.3 billion yuan in losses in 1995, up by 34.4 per cent compared with 1994.
