It will also promote further mergers and bankruptcies among state-owned enterprises. Third, the government would continue to appoint special inspectors to monitor the management teams of large or medium-sized state-owned enterprises. On January 8, , the second group of 38 special inspectors had graduated from training and were assigned to state-owned enterprises.
Apart from this, another 60 special inspectors have been assigned to state-owned enterprises since January to oversee priority projects. Appropriate steps are being taken to overcome the livelihood problems of unemployed and laid-off workers, and all possible means are being used to put re-employment projects in practice and to establish social security systems.
The Chinese authorities regard the reduction of surplus workers as an important step toward the improvement of economic performance of state-owned enterprises. Since , the government has worked to increase the economic benefits of employee reductions in state-owned enterprises by promoting the establishment of re-employment centers.
In the "Report on the Work of Government" to the March National People's Congress, Premier Zhu Rongji announced a policy based on "three assurance lines" to assist laid-off workers. Under this policy, laid-off workers who are re-employed must sever their employment contracts with the state-owned enterprise that originally employed them. Laid-off workers who remain out of work after three years will be transferred to social insurance agencies, which will provide unemployment benefits. These workers will also have to sever their employment contracts with the state-owned enterprises they originally worked for.
If any workers remain unemployed after receiving unemployment benefits for two years, they will be transferred to the public welfare administration, which will provide the minimal living allowance available to urban residents. Interim Assessment of and Future Outlook for the State-owned Enterprise Reform As stated in the previous section, in March , the Zhu Rongji cabinet announced new reform targets based on the achievements of It has taken a series of measures to achieve those targets.
The final assessment must wait until the end of the year , which is the final deadline set by the Zhu Rongji cabinet for the reform process. The following is an interim assessment based on progress to date under the "three-year SOE reform plan," together with a review of key factors that have become apparent so far.
This will be followed by an attempt to forecast the outlook for the reform process.
- 1. One Ideal among Others.
- Revolt on the Right: Explaining Support for the Radical Right in Britain;
- Studia Patristica Vol. XXXI.
- The Dark Mountain;
Despite the effects of Asian financial crisis since the second half of and the massive flooding that hit northeast and southern China in the summer of , the state-owned enterprise reform is apparently on track, especially with regard to the reduction of losses in state-owned enterprises.
This should be highly evaluated. Second, though the state-owned enterprises were the main source of state revenues for a long period of time, the percentage of loss-making state-owned enterprises and the size of their losses have risen steadily over the years, to the extent that the losses made by loss-making enterprises have surpassed and negated the profits raised by profitable state-owned enterprises almost constantly over the past few years. This is why "Zhu Rongji's three-year SOE reform plan," aimed at eliminating losses run by state-owned enterprises, is seen as being highly significant.
If the plan succeeds in turning around the loss-making performance of state-owned enterprises, the state will be able to secure its revenue flows, and there is also likely to be an improvement in the competitiveness of Chinese industry. Third, as stated above, the "three-year SOE reform plan" does not target all state-owned enterprises, but rather focuses mainly on large and medium-sized industrial enterprises. In particular, a transition away from loss-making performance in the textile industry is identified as the starting point for reform.
As such, the state-owned enterprise reform focusing on a single industrial sector at first is expected to produce ripple effects in other sectors. Fourth, as part of its efforts to overcome the problem of losses in state-owned enterprises, the Zhu Rongji cabinet has adopted the "three assurance lines" policy.
The announcement of this policy to all the people of China is highly significant. This is because the reform of state-owned enterprises will involve the restructuring of large numbers of surplus workers, and unless the plan is understood and supported by the people, there could be serious implications not only for the implementation of the reform process, but also for social stability.
Fifth, the Chinese authorities have assigned special inspectors to large and medium-sized state-owned enterprises in an attempt to monitor management teams of the enterprises and improve management efficiency. To some extent, the reform measures themselves can be expected to contribute to the improvement of efficiency in state-owned enterprises. Though the reform have yielded some benefits, the losses of the state-owned sector as a whole are still a serious problem.
For example, according to China's State Statistical Bureau, the total losses of state-owned enterprises and state-owned holding companies increased by The official view in China has been that the losses of state-owned enterprises were attributable to excess capacity. This reflects the view that the elimination of surplus capacity held by state-owned enterprises will restore and enhance the competitiveness of the textile industry, thereby solving the problem concerning profitability.
Mali SSR Background Note
While excess capacity is one of the factors responsible for the losses by state-owned enterprises, however, it is not the fundamental problem. The writer would like to emphasize that the basic reason for the loss-making performance of state-owned enterprises is the inefficiency of China's state-owned enterprise system. Characteristics of that system include: bureaucratic control, which has resulted in the establishment of state-owned enterprises in uncompetitive as well as competitive sectors, and in the continuing existence of monopolies in many industrial sectors; the lack of a clear demarcation between ownership rights and management rights, which are both held by the government; the lack of demarcation between the administrative functions of the government and the economic functions of enterprises; the overlap between the political functions of the Party and the economic functions of enterprise; and the lack of separation between various social functions and the economic functions of enterprises.
However, a fundamental solution to the loss-making performance of state-owned enterprises has not yet been found. The key factor appears to be in the state-owned enterprise system itself. Real solutions will come only when the inefficiency problem of the state-owned enterprise system has been thoroughly resolved.
The Chinese government first began to work on reforms designed to turn state-owned enterprises into modern companies in October The main methods used have been 1 the conversion of large and medium-sized state-owned enterprises into join-stock companies, 2 the reform of small state-owned enterprises under joint-stock cooperative system, and 3 merger and acquisitions of state-owned enterprises by foreign capital. The CCP National Congress formally adopted a resolution calling for the full-scale implementation of a program to turn state-owned enterprises into joint-stock companies.
In the past, the government held both ownership and management rights in state-owned enterprises.
Justice and Rule of Law
Once an enterprise has been changed into a joint-stock company, however, individuals or corporations can own the stocks, and the enterprise shifts out of state ownership. This is what happened when Japan's National Railway system was privatized. The original state-owned enterprises is turned into a joint-stock companies.
By , over 10, joint-stock companies had been created or restructured from state-owned companies. In China, the normal practice when converting a state-owned enterprises into joint-stock companies. However, the traditional concept of official ownership was redefined at the CCP National Congress, and it appears certain that the privatization process will become significantly easier.
The conversion of state-owned enterprises into joint-stock companies is expected to lead to the discovery of solutions to remedy the inefficiency and loss-making performance of state-owned enterprises.
- Fire And Iceland (Fables of the Carpailtin Campfire Book 2)!
- Differential and integral calculus!
- Chinese Common Law? Guiding Cases and Judicial Reform;
Due to the limitations of space, the discussion and analyses in chapter II have focused mainly on the "three-year SOE reform plan" and progress with its implementation. The inefficiency of the state-owned enterprise system and the reforms needed to remedy this problem will be examined elsewhere. Financial System Reform -Progress and Outlook 1. Identification of Issues and Aims of Research The onset of the Asian financial and currency crisis in the second half of exposed the fragility of financial systems in Asian economies.
In contrast, China's financial systems remained basically untouched by the crisis, due to strict foreign exchange controls and the fact that capital accounts had not yet been liberalized. However, the Chinese financial system is not without its problems. Signs of instability include problems with non-performing loans and the bankruptcies of non-bank companies. The Chinese authorities need to deal with some urgent issues, including ways in which to prevent the effects of the Asian financial crisis from spreading into China, and measures to keep similar latent problems existing in the Chinese economy from turning into a real crisis.
It was under these circumstances that the Chinese government held a national financial conference during November , At this conference, the government adopted, as a financial reform goal, the creation of a financial system suitable for the development of market economy, over a period of approximately three years. Then, as a vice premier, Zhu Rongji was effectively the most senior official in the area of economy and finance. In his inaugural speech after his appointment as premier in March , he attracted considerable interest at home and abroad by identifying financial system reform as one of "three programs for execution," and by promising that the problems would be fundamentally solved within three years.
It was from this time that the media began to refer to the financial system reform as "Zhu Rongji's three-year financial reform plan. About one year has passed since the launch of "Zhu Rongji's three-year financial reform plan.
In chapter III, we will approach the question of financial reform from these perspectives. The main aim is to analyze the background, policies, and realities of the "three-year financial reform plan," in order to clarify the current state and characteristics of the reform process and identify any problems.
Chapter III consists of the following sections. Finally, the writer will attempt to forecast the outlook for the financial system reform. Background of Financial System Reform China's shift to a reform and open-door policy began at the end of The start of the financial reforms was relatively late, and the reform process did not begin in earnest until the second half of However, numerous measures had been implemented before that time.
While the discussion here will focus primarily on "Zhu Rongji's three-year financial reform plan" rather than the whole trend of financial system reforms, we will look first at the background of the present reform, including the actual situation of the Chinese financial system and the problems that affect it. For many years, the only bank in China was the People's Bank of China.
Until , the People's Bank sign hung in front of all banks in major cities. The only activities of the bank were the absorption of savings, lending, and the provision of remittance services. There was no wide-area clearance system for bills, checks, and other instruments.
The banking sector existed as an adjunct to the government sector. Banks simply implemented the financial plans of the central government, and they had no independence.
It was assumed that profits gained were paid to the government, and losses were offset by subsidies from the government. The Chinese financial system that existed under the old planned economy was basically not affected by the types of problems that are occurring today, such as non-performing loans and bankruptcies among non-bank financial institutions.
Under the People's Bank of China, which is China's central bank, there are three policy banks, four state-owned commercial banks, and the private sector commercial banks. There are also the Urban Cooperative Bank, the Rural Cooperative Bank, and various types of non-bank financial institutions. The transition from the situation prior to the adoption of the reform and open-door policy, when the People's Bank of China was China's only bank, to the present system began in The aim was to expand banking services, improve the financial system, and introduce the principle of competition.
In , private sector commercial banks were established at the regional and national levels. Since then, the number of financial institutions has increased rapidly. The number peaked in the early s, when there were over 60, banks and non-bank financial institutions. Gradual improvements were made to the financial system. The commercial banking functions of the People's Bank of China were transferred to the four major state-owned professional banks after their establishment in At the same time, the People's Bank of China, as China's central bank, was placed under the direct jurisdiction of the State Council.
However, it did not begin to function as a proper central bank until It was not until the enforcement of the People's Bank of China Law in March , that its status as a central bank, the monetary policy, and its areas of responsibility including supervision of financial institutions were fully specified Table 6. The four major state-owned professional banks were restructured into state-owned commercial banks with autonomous management rights. The purpose of these changes was to separate policy finance from commercial finance.
Related Court Reform (Law, Governance, and Development Research & Policy Notes)
Copyright 2019 - All Right Reserved