The Shanghai municipal Government is optimistic that it will be the first city in the mainland to establish a modern enterprise system by the end of this year. To help achieve such a goal, 80 per cent of the city's state-owned enterprises and 80 per cent of its state assets had already become pilot candidates in its enterprise reform programme, Wang Xiaoyuan, head of the Shanghai Modern Enterprise Reform Leading Office, said. He admitted the move was a big risk for Shanghai as the city had a large number of state enterprises. 'The city must resolve the three historical problems of high debt ratio, surplus workers, and cradle-to-grave social security obligations of a huge number of state firms,' Mr Wang said. But he added that the city had been able to speed up reforms in the past few years as workers and cadres were more willing to accept the idea of asset reorganisation. 'In the past, state firms focused only on production but now they care about production as well as asset development; how to maintain growth of their asset value has become their important target,' Mr Wang said. As a result, several cross-sector corporations, including chemical and medical, have been established. 'For the past six years, Shanghai has had an annual growth rate of productivity of over 10 per cent,' he added. 'The municipal Government has supported enterprises to absorb foreign and workers' capital. It has also helped them to relocate from the city centre to rural areas so that workers' quarters and old plants in the city can be redeveloped,' Mr Wang said.