Wednesday's executive meeting of the State Council, China's
cabinet, agreed to work toward a situation where bankrupt
state-owned enterprises (SOEs) are no longer bailed out by the
government.
The aim is to move further towards a socialist market economy,
and to force SOEs to work to the rule of law and the realities of
the marketplace.
Municipal and provincial authorities in Beijing,
Shanghai,
Jiangsu,
Zhejiang
and Fujian have
already stopped the practice.
The government currently subsidizes a selected group of SOEs in
extreme financial difficulties. In return, they are expected to
properly arrange for laid-off workers' livelihoods.
By April 2004, 3,377 insolvent SOEs had been closed through
administrative intervention and 6.2 million employees resettled.
The government had allocated 49.3 billion yuan for SOE bankruptcy
subsidies and allowed state-owned banks to write off a total of
223.8 billion yuan in bad loans.
Li Rongrong, minister in charge of the State-owned Assets
Supervision and Administration Commission (SASAC), said
earlier that the period of transition from policy-aided bankruptcy
to bankruptcy according to law would take about four years.
The State Council meeting, chaired by Premier Wen
Jiabao, also approved a program in principle dealing with the
closure and bankruptcy of SOEs, a program on rural highway
construction and draft regulations on the supervision of the
electricity sector.
The meeting urged all agencies to handle the closure and
bankruptcy of SOEs strictly in line with legal procedures to
prevent the loss of state assets, protect the legal rights of
workers and properly handle debts.
"Meanwhile, enterprises with the right conditions are encouraged
to merge with others," stated meeting members.
(Xinhua News Agency February 3, 2005)