State enterprises in Liaoning doing better, say officials

THE performance of state-run enterprises in Liaoning has been improving, and they are set for further progress with the help of new government policies, say senior officials from the northeastern province.

Liaoning's development had been hampered by the predominance of state-run enterprises with outmoded equipment dating back to the 1950s, provincial governor Yue Qifeng told reporters.

But over the past two years, there had been a change for the better in the fortunes of these enterprises.

Last year, the value of industrial output in the province rose 18.9 per cent. Mr Yue said the number of enterprises making losses had dropped ''by a large margin'', while profits of those in the black had increased by 120 per cent.

He blamed the province's previous years of stagnation on the dominance of central planning and dependence on the state-run sector.

He noted that the province had handed over 15 billion yuan (about HK$20.2 billion at official rates), more than half of its 27 billion yuan revenues, to the central government last year.

The task of overhauling state-run enterprises was onerous, Mr Yue said.

As part of what the province called its ''second economic revolution'' - the first being in the 1950s when the northeast became a centre of heavy industry - Liaoning planned to reduce tax burdens and government claims on profits of state-run enterprises, he said.

He listed development of high-technology, township enterprises, the service sector, private business and foreign-funded enterprises as priorities over the next few years.

The objective was ''to change the original situation in which we make large investments but get small returns'', he said.

Mr Wu Disheng, the mayor of provincial capital Shenyang, said efforts had been made over the past few years to solve the problems facing state-run enterprises, but, until recently, ''not much progress has been made''.

In Shenyang itself, 22 per cent of state-run enterprises were making losses, slightly better than the national average of 25 per cent, he said.

State-run enterprises in the city saw their profits increase more than 400 per cent last year.

''This proves the enterprises have a future,'' Mr Wu said.

This year, in an attempt to boost state-run enterprises, the municipal government would take steps to stop government interference in corporate affairs, and to develop a social security system, thus reducing the social welfare burden on enterprises, he said.

In a pitch for central government approval of Shenyang as the centre of a third official stock exchange, Mr Wu listed a number of reasons why his city would be the best choice.

He said Shenyang had set up the country's first experimental exchange in 1986, the city had nearly 36 enterprises that had issued shares, and that as a result, people in Shenyang had an understanding of stocks and a number of professionals had already been trained in stock trading.

Mr Wu said that if Beijing failed to grant Shenyang the next official stock exchange, ''this will be an historical misunderstanding''.