China reviews ownership

Chris Yeung

THE Communist Party is to map out innovative measures to revamp the public ownership system - one of the most sensitive components of Chinese socialism.

According to the pro-China monthly magazine Mirror, the upcoming third Central Committee plenum will reach ''new understandings'' and seek ''new breakthroughs'' on the principle of ''public ownership as the backbone'' of the socialist economy.

The blueprint would enable enterprises under the public sector to diversify their operations and hire private managers to boost their competitiveness in a quasi-capitalist economy, it said.

These included the issuing of shares and contracting out the management to private entrepreneurs or collectives, the report said.

''The new reform will be formulated in accordance with the demand made by Deng Xiaoping that any changes must be conducive to the enhancement of productivity.

''It stresses the importance of boldly emancipating thoughts in pushing ahead with reforms on the right of ownership,'' the report said.

Indications that the sensitive issue of ownership would be tackled at the party plenum, widely reported to be scheduled for next week, were fortified in articles carried by the People's Daily and the Economic Daily on Tuesday.

A mainland analyst, however, cast doubts on a quick solution to the thorny issue.

''The change of ownership of property rights will give rise to a new bourgeois class. There will be fundamental challenges to the socialist system. Furthermore, what will be the relationship between the state and property rights ownership? These remainedunresolved,'' he said.

The People's Daily commentary called on people to free themselves from ideological barriers that reforms to ownership of property would undermine the central role of the public ownership system in a socialist economy.

''The central role of the public ownership system should be measured on the basis of the whole nation. The ratio of public assets can vary among different regions, sectors and enterprises,'' it said.

''There are various forms of public ownership system . . . [such as] controlling shares by the state or management by the private sector.'' The Economic Daily said in a front-page commentary that the contrast between a shrinking state sector and a booming private sector had sharpened in the past few years.

One-third of state-owned enterprises remained in the red, official figures said, but many said the number of money-losing factories could reach two-thirds.

In many cities, especially in Guangdong and Zhejiang, the private sector already dominated the economy.

The Economic Daily said the phenomenon had given rise to conflicting views on the fate of the public ownership system.

At one end, it called for whole-sale privatisation, the paper said, while the other extreme said the state should take steps to uphold the central role of the public sector and curb the growth of the private sector.

''The insistence of the public ownership system as the backbone [of the economy] should be a means, not the end,'' it asserted.

''The ultimate goal of choosing the public ownership system is to boost productivity. The size of the public sector and how to realise its central role can only be determined by whether it increases productivity,'' the article said, echoing the dictum ofMr Deng on productivity.

The leading newspaper on economic reform said the state sector would serve the central role if it formed the backbone in major industries and contributed to the high-speed, stable and co-ordinated growth of the economy.

''It does not have to play the leading role in all sectors. Other economies should be allowed to play a more important role in areas such as service and commerce.'' The state-owned sector should play a pivotal role in the development of basic industries, infrastructure and advanced industries, it said.

The article said the growth of a mixed economy should cause no alarm.

''What's the danger if we have people in Wenzhou in Zhejiang province or Shisi in Fujian province who get rich through their booming private sector? What's wrong with it? ''[We] should not be afraid of the growth of the private sector, especially those which remain backward.'' The combination of the public and private sectors was an inevitable trend, the article said.

In the face of market competition, it said the two sectors would form a partnership whenever necessary to seek mutual benefits.

''We should not artificially restrict the growth of the mixed economy so long as it is beneficial to the deepening of reform, the enhancement of the strength of the dynamism of enterprises and the dynamism of all sectors.

''If we want to develop a market economy, we cannot avoid changes to the structure and reforms to the public sector. We cannot scuttle the growth of other economies.

''Fears that the principle of 'public ownership as the backbone' will be undermined and the nature of socialism will be altered are unnecessary,'' the article said.