In conjunction with higher standards to test the performance of state-owned enterprise executives, the Chinese authorities will offer them better pay and benefits.

Like in many local state enterprises, managers at central SOEs will get salaries that better reflect the market conditions starting from next year, according to Shao Ning, deputy director of the State-owned Assets Supervision and Administration Commission (SASAC).

The commission is also studying stock options, pension benefits and other long-term incentives for top executives, he said at a forum in Beijing on Monday.

Shao said the SOEs would also reform the personnel system and hire more senior executives through open recruitment.

SASAC, the central State assets supervisory body, is now directly supervising 189 of the biggest and central SOEs as the representative of the state in these enterprises, leaving the rest to the mandate of local state-asset watchdogs.

There has been a tide of restructuring in the economy over the past few years through mergers and acquisitions of once state-monopolized sectors. Even the biggest SOEs have been feeling the pressure to reform and boost efficiency.

Li Rongrong, director of SASAC, told reporters last week that the central SOEs should try to be the pace-setters in their industries within two years, or they would face more drastic reshuffle.

The commission is also working on a regulation on the performance evaluation of SOE chiefs, which would be implemented next year. Those meeting the standards will be able to get an average annual salary of 250,000 yuan (US$30,193), said Li.

"SOEs are not the training schools for foreign companies," he said, "We should try our best to retain the talents."

All these indicate that the government has realized that a precondition to further the SOE reform is to get the right people to run these enterprises and assure them of corresponding rewards.

In the past, many top executives of the central SOEs were directly appointed by the central government, normally chosen from civil servants.

But there has been a growing call for more professional executives to make the enterprises more profitable.

To inject fresh expertise to these enterprises, SASAC has organized a large-scale global recruitment campaign to find people for seven senior positions in six central SOEs, including the country's second biggest telecom operator China United Telecommunications.

The campaign has attracted 463 applicants from home and abroad.

In some major cities, especially Shenzhen, local authorities have already made moves in SOE executive recruitment and payment reform earlier than Beijing.

In Shenzhen, the general manager and the chairman of a local SOE, who are normally appointed by local government, can draw a basic annual salary that ranges from 96,000 yuan (US$11,594) to 120,000 yuan (US$14,492), based on the size and performance of the enterprise, according to a document adopted by the municipal government in May.

But if the results of the enterprises are good, they can get bonuses as high as four times of the salary, which means that the highest gross pay of an SOE chief can be 600,000 yuan (US$72,463) a year.

(China Daily November 19, 2003)