SOEs: Backbone of China's Economy
����This article is written by Our Staff Reporters Wang
Yantian and Pi Shuyi in praise of socialism and to celebrate the 50th birthday of the
People's Republic of China. The article runs in part as follows:
����As they review the 50-year development history of New
China, people will not forget the contributions of State-owned enterprises, praising them
as the backbone of China's economy.
����What old China left to us was a shambles. In 1949 the
country had only a little over 10 billion yuan worth of fixed assets. By 1952 total
industrial output value was only 34.9 billion yuan. The industrial structure was lopsided,
industrial departments were single and level was low, even nails, matches and candles had
to be imported.
����All neglected tasks had to be undertaken in New China.
However, some Western countries imposed blockade and embargo on New China. Ordinary people
needed food and clothing, farmers needed farm machinery and implements and the army needed
airplanes and artillery.... They could not gain all these without modern industries. The
newborn Republic urgently needed to seek a road to industrialization.
����The State-owned economy emerged as the times required.
We transformed the bureaucrat-capitalist enterprises into State-owned enterprises at the
beginning. During the First Five-year Plan period, the 156 projects built with aid from
the former Soviet Union expanded State-owned economic strength. State-owned enterprises
historically became the main force of China's industrialization.
����Our motherland needed motor vehicles. Large groups of
experts, cadres and workers came from all parts of the country to gather in Changchun in
northeast China. Through their hard work over a period of several years, on July 13, 1956,
the first Liberation-brand motor car got out of the production line.
����Our motherland needed petroleum. Displaying a heroic
spirit, the Daqing people launched a great battle for oil over the vast wilderness, after
battling with heaven and earth, they finally removed in one move the label of China being
oil poor, Daqing has remained to this date the file leader of China's industry and Daqing
spirit is still our valuable cultural and ethical wealth.
����Based on State-owned enterprises, the State
concentrated forces to launch large-scale economic construction in the 1950s-60s. The
modern industrial system, which started from scratch and developed from small to big,
broke down the West's economic blockade and provided products needed in economic
construction and people's daily life and consolidated the newborn People's Republic.
����Today when we are advancing toward the socialist market
economy, State-owned enterprises remain the pillar of the national economy and shoulder
the heavy historical task of enhancing national economic strength, national defense and
the cohesive force of the nation.
����On August 20 this year, the contract signing ceremony
for the new Dalian Shipyard to build five 300,000-ton super-large oil tankers for Iran
took place in the Great Hall of the People in Beijing. The building of such a large oil
tanker is an important indication of a country's shipbuilding level. In the international
competitive bidding, the new Dalian Shipyard defeated Japan's Mitsubishi and the ROK's
Daewoo and some other strong opponents, taking over this contract worth US$370 million at
one stroke. The new Dalian Shipyard, founded in 1990, has now developed into China's
largest ship general-assembly export base. In 1962,Shanghai Jiangnan Shipyard designed and
built China's first 10,000-ton-class Dongfeng ocean-going ship. The progress from making
10,000-ton-class ship to building 300,000-ton-class oil tanker marks the continuous
development of China's shipbuilding industry. China has become the third largest
shipbuilding country in the world.
����As we look around the economic field, we find that
currently, the financial, railway, telecommunications, space, petroleum, electric power
and other key areas have been basically held in the hands of State-owned enterprises; the
State-owned economy also holds a dominant position in energy, transportation, posts and
telecommunication and other basic sectors and in metallurgical, petrochemical, chemical,
automobile, machinery, electronic and other important raw and semi-finished materials
industries and pillar industries. The output of China's steel, coal, chemical fertilizer
and other important industrial products has jumped to rank first in the world, electric
energy production and the output of crude and chemical fiber have also placed themselves
in the front ranks of the world, they are all produced mainly by State-owned businesses
and State-owned holding enterprises. State-owned enterprises are the main sources of the
country's financial revenue, currently the proportion of taxes they turn over to the State
accounts for 55 percent of the financial revenue, effectively supporting the country's
reform and construction.
����State-owned enterprises have made great contributions,
but they also have various institutional defects. To adapt themselves to the socialist
market economy and to develop and expand themselves in competition, State-owned
enterprises can only rely on reform.
����Reform is impacting the old economic system. Under the
highly centralized planned economic system, State-owned enterprises were not the genuine
enterprises, but were only appendages to administrative organizations. Enterprises lacked
decision-making power in operation and market competitive pressure; they also lacked the
internal motive force for constant development and strict budgetary restriction. Reform
aims to eliminate these institutional defects, so that State-owned enterprises will become
genuine enterprises.
����Reform of State-owned enterprises began with expanding
decision-making power for enterprises, it went through the experiments and explorations,
including the substitution of tax payments for profits and the contract system, the
enterprises are advancing toward a modern enterprise system, more and more State-owned
enterprises have become the market mainstay which engage in self-management and assume
sole responsibility for their own profits and losses, displaying their skills to the full
in market competition.
����Reform has enhanced the overall vigor of State-owned
enterprises. Statistics indicate that in the 20 years from 1978 to 1998, the average
annual growth of the total industrial output value of China's State-owned businesses and
State-owned holding industries came to 8.7 percent, that of the total value of assets to
16.8 percent and that of tax payments to 12.3 percent.
����The readjustment of the distribution and structure of
the State-owned economy has improved the overall performance and quality of the
State-owned economy. The system taking public ownership as the mainstay and allowing the
common development of varied economic sectors has livened up the entire national economy.
Competition among various economic sectors has spurred State-owned enterprises to enter
the market and develop themselves through competition.
����Compared to the situation before the start of reform,
although the proportion of the State-owned economy has declined somewhat, the overall
strength of the State-owned economy is increasing, the total volume of state assets is
growing. By the end of 1998, the total volume of China's State-owned assets had reached
8221.1 billion yuan. Particularly through the form of solely State-funded enterprises,
holding and buying shares, the controlling power of the State-owned economy had further
expanded and continued to play a leading role in the national economy, controlling the
lifeblood of the national economy from beginning to end. By the end of 1998, the non-State
capital absorbed by State-owned holding enterprises had run to 393.03 billion yuan, up by
21 percent over the previous year; the total asset volume occupied by State-owned
enterprises in the basic industry of the national economy had stood at 5672.24 billion
yuan, making up 42.1 percent of the total assets volume of all State-owned enterprises, up
by 13.7 percent over the preceding year.
����In the fall of this year, the Fourth Plenary Session of
the 15th Central Committee of the Communist Party of China held by the Party Central
Committee specially studied the problem relating to the reform and development of
State-owned enterprises and made an important decision.
����The fact that State-owned enterprises have gained
unprecedented development in the reform and opening drive is not tantamount to having
solved the problem concerning the reform and development of State-owned enterprises.
Currently, the institutional transformation and structural readjustment of State-owned
enterprises have entered the stage of tackling the most difficult problems, some
deep-seated contradictions and problems have exposed themselves in a concentrated way,
difficult problems are plaguing some State-owned enterprises, these include inflexible
mechanisms, the decline of economic efficiency, excessive asset-liability rate, excessive
redundant workers, heavy burden on enterprises and a hard life for some workers.
����Difficult problems urgently need to be resolved and
complete victory must be ensured for the battle to storm the fortified position.
����Victory in this battle not only concerns the success
and failure of the reform of State-owned enterprises, as well as success and failure of
the reform of the entire economic system.
����State-owned enterprises are the pillar of the national
economy. Increase in comprehensive national strength has increasingly become a dominant
factor determining the future and fate of a country. It is impossible for China to enhance
its economic strength, national defense and the cohesive force of the nation without the
constant development and expansion of the State-owned economy.
����China needs the State-owned economy which gives full
play to its leading role, the socialist market economy needs State-owned enterprises full
of vigor.
����After years of practice, the Party Central Committee
and the State Council have formed a series of important guidelines and adopted many major
measures for the reform and development of State-owned enterprises, the numerous
enterprises in various localities have accumulated valuable experiences. Since the
beginning of this year, State-owned enterprises have checked the gliding trend of economic
efficiency and a steady picking up trend has emerged. The three provinces in northeast
China where State-owned enterprises are relatively concentrated and there exist big
difficulties have realized dramatic reduction of losses and increase in profits.
Petrochemical, machinery, electronic, light industry and textile industries have
respectively increased profits, reverted or reduced economic losses.
����The Fourth Plenary Session of the 15th Central
Committee of the CPC has sounded the advance for battling to win successes in the reform
and development of State-owned enterprises. So long as we work with one heart and one
mind, do pioneering work, work in a down-to-earth manner, we will certainly achieve the
objective for the reform and development of State-owned enterprises, the backbone of
China's economy will certainly become stronger.
Indepth 1999-09-06 Page1
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