Center

China to approve bankruptcy of over 500 SOEs

(Xinhua)
Updated: 2006-12-06 09:40

China plans to approve the bankruptcy of around 500 more struggling state-owned enterprises (SOE) by the end of this year. 

According to the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council, more than 2,000 SOEs will go bankrupt before 2008. The commission has approved 619 of them.

Li Wei, deputy director of the SASAC, said that they would try to finish work on the bankruptcy plan in the first half of 2007.

"Social security, reemployment and exhausted mines are major problems to consider in the bankruptcy process," said Li.

The 2,000 SOEs will be the last exception in China's market economy. Afterwards, all the 8 million companies in China will follow a unified corporate bankruptcy law if they fail.
The process of bankruptcy for SOEs over the past ten years has been referred to as "administrative closure". Unlike the bankruptcy process outside China, the money recovered from insolvent SOEs was used to manage the unemployed first, with the leftovers going to the creditors - the state-owned banks.