THE future of China's most dynamic sector - rural enterprises - hangs in the balance.
A Hong Kong China News Agency report identified potential problems as weaknesses in structure, reliance on big enterprises, mismanagement, outdated technology and low-quality products.
The report attributed the success of village and township enterprises over the past 15 years to the ''ossification'' of state-owned firms' operation and management structure.
Paralysed by constraints such as direct control by administrative authorities and lack of planning, state firms had failed to adapt their operations to market forces, it said.
''Of course, they [state firms] will not be able to compete with rural enterprises which are able to make prompt changes in accordance with the needs of the market,'' the report said.
But the news agency was optimistic that a forthcoming revamp of property ownership and management of state firms would enliven their operation.
The ''crises'' facing rural enterprises would become more acute after state firms were allowed to operate with greater autonomy, it said.