We are fully aware that there are still quite a few problems in our economic development. For example, some state-owned enterprises are experiencing difficulties in production and business operation, which has led to increased unemployment and poor economic profits.
The reform of state-owned enterprises is considered the principle task of China’s current economic restructuring endeavor. It is proposed that within about three years, through reform, reorganization, upgrading and improved management, most of the large and medium-sized state owned loss-making enterprises should have been extricated from their predicament, and a modern enterprises system in the bulk of large and medium-sized state-owned hey enterprises should have been establishes initially by the end of the century.
The following constitutes the guidelines and basic tasks for the reform of state-owned enterprises: First, we should take the reform of state-owned enterprises as the pivotal point in economic restructuring, and strive to change their operating mechanism, with the establishment of a modern enterprises system as our orientation. Second, we should carry out a strategic reorganization of state-owned enterprises by learning to manage large enterprises well while relaxing control over small ones. Third, we should explore various forms for realizing public ownership. Fourth, we should combine our efforts to reform enterprises with efforts to reorganize, upgrade and exercise more effective management of them. Fifth, we should encourage mergers, standardize bankruptcy procedures, redirect laid-off workers, increase efficiency by reducing redundant staff and implement re-employment programs. Sixth, we should promote supportive reforms focusing on the establishment of a social security system.
In important industries and priority fields, the establishment of large enterprise groups should be encouraged in order to increase their competitiveness in both domestic and foreign markets. In boosting enterprise groups, we should persist in taking the market as our orientation, break departmental, regional and ownership barriers, and support association between strong enterprises so that they will take advantage of each other’s strengths. In accelerating the reorganization and readjustment of state-owned enterprises, we should encourage strong enterprises to merge with difficulty-ridden ones so as to make more efficient use of resources. We should declare bankrupt according to regulations those loss-making enterprises whose long-time difficult situation is unlikely to end. Government at all levels should be concerned about and support the effort of redirecting surplus employees of enterprises to improve business efficiency.
Reform will take place actively and steadily in matters concerning the establishment of the joint share system and the joint stock cooperative system. We shall corporatize large and medium-sized enterprises in a standard way where conditions permit, allowing some enterprises to be listed and issue stocks in accordance with market conditions. In the reform of enterprises, we shall overhaul their operational procedures, separate government functions from enterprise management, and delineate the rights and responsibilities of the state and enterprises. Meanwhile, we should improve the internal management system and prevent the devaluation of state assets. We should accelerate the pace of relaxing control over small state-owned enterprises and invigorating them by way of reorganization, association, merging, leasing, contract operation, the joint stock cooperative system and sell-off. We should make sure that the right to independent operation is delegated to small enterprises so that they can be responsible for their own profits and losses and adapt themselves to the market in a more flexible way.
The management of enterprises should change their outdated way of thinking so that production, operation and internal management can meet the needs of the market. At any time, importance must be attached to the work of speeding up technological progress and developing new products. We must readjust the product mix on a regular basis, improve marketing and after-sale services, reduce production cost and upgrade quality, so as to become stronger competitors in the market.