More than 2,000 state-owned enterprises (SOEs) on the brink of
insolvency are expected to go bankrupt within five years, said
sources from State-owned Assets Supervision and Administration
Commission (SASAC).
This is an important step in the country's state-owned assets
restructuring process, the anonymous official told China
Daily on the occasion of the Mayors' Summit Forum held over
the weekend in Beijing.
Many of these companies are SOEs in "sunset industries," and
have suffered long-term losses due to poor management and outdated
skills and technologies, he said, adding that both foreign and
private sector companies will be allowed to participate in the
bidding for takeover of such bankrupt companies.
The official also expressed his concern that the policy of
allowing these loss-makers to go bankrupt will make China's
employment situation much tougher.
The Ministry of Labor and Social Security said recently that
China needs an additional 24 million jobs for its unemployed urban
residents. The figure includes about 10 million young urban
residents who were added to the urban labor market earlier this
year, 6 million workers laid off from SOEs, and nearly 8 million
jobless residents registered with government labor agencies.
But China's growing economy will add only about 10 million jobs
this year, if the national economy grows at about 7 percent for the
year. This will mean an oversupply of labor of some 14 million
people in urban China.
"Further bankruptcies will make things extremely tough for
redundant workers, and will likely exacerbate China's urban
unemployment problems," said the official.
But the ministry seems confident that the situation for
re-employment of laid-off workers is promising. The ministry
recently announced that about 18.3 million workers laid off by SOEs
in the past five years have found jobs, with most of them employed
in the service sector and private companies.
"Their re-employment made it possible for China's state-owned
sector to undergo strategic restructuring over the past five years
as the country shifted from a planned to a market economy," said
the ministry.
The number of people presently employed in the country's SOEs is
50 million, as against 71 million five years ago.
At the forum, organized by the China Association of Mayors,
experts and officials said the bankruptcy policy is an essential
measure in restructuring and reviving China's SOEs.
From 1995 to 2002, a total of 7,798 SOEs went bankrupt. But
SASAC said that at the end of 2002, there were still 159,000
state-owned or state-controlled industrial and commercial
enterprises.
(China Daily September 1, 2003)