A law to regulate the ownership and management of state assets, already five years in the drafting, remains trapped by quarrels among leadership, but 300 holding companies to run these assets have been set up nationwide, as envisaged by the law. Work began on the State Asset Law in 1993, with the aim of providing a legal basis for the transformation of 300,000 state companies into financially independent firms with clear ownership rights and management able to operate without government interference. It calls for the establishment of state holding companies, to exercise overall control of state assets, while leaving day-to-day management of the firms in the hands of professionals working under fixed-term contracts. According to official figures, the state invested 2.8 trillion yuan (about HK$2.6 trillion) in such companies between 1950 and 1990, of which 830 billion yuan, or 30 per cent, was stolen, wasted or misused. The law was approved by the standing committee of the National People's Congress (NPC) in 1996 but, because it touched on political issues had to be referred to the top for final approval. The law was revised and should have been on the agenda for passage by the full NPC in March but was not. The meeting elected Zhu Rongji as prime minister. Mr Zhu while agreeing with the objectives of the law, has adopted a different approach to solving the problem of state firms. As a result, the law still has not been passed, and there is no timetable for adopting it. On the ground, however, the content of the law has been widely adopted. In 1987, Shenzhen was the first city to set up a holding company for state assets, with net assets worth two billion yuan. By last year, this had grown into three holding companies, with net assets of 31.39 billion yuan, assets of 145.97 billion and profits of 4.71 billion. Nationwide, 300 such holding companies have been set up, 152 at provincial level and 145 at city level, with registered capital of 304 billion yuan and net assets of 290 billion, with a controlling share in 10,070 companies and shares in 1,460 others. They are mainly in light industry and textiles, construction materials, distribution and retail. Proponents of the law argue that it is needed to regulate the haemorrhaging of state assets that has accelerated since the 15th Communist Party congress last September, which approved the sell-off, merger and leasing of small and medium-sized state companies. In many cases, officials of local governments have sold such companies at below market price to their relatives, friends and associates or have forced workers in money-losing firms to buy them out.