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China axes redundant operations of SOEs
Updated: 2004-04-30 14:02

Determined to accelerate the process of splitting redundant operations from state-owned enterprises, China has designated three leading enterprises to experiment with the downsizing.

At a meeting held Wednesday, Chinese Vice-Premier Huang Ju asked the China National Petroleum Corporation, Sinopec and Dongfeng Motor Corporation to properly handle the transfer of former subsidiaries and ensure the smooth operation of these units and social stability.

It used to be common for China's state-owned enterprises to run their own nurseries, schools, hospitals and even fire brigades, police force, justice system, water, electricity and heating systems. Consequently, many enterprises are like mini-societies.

China's state-owned enterprises spend approximately 45.6 billion yuan (US$5.49 billion) annually for the running of various auxiliary units that should be the business of the society.

Huang said splitting off redundant units of state-owned enterprises was an important measure in deepening reform of state-owned enterprises, reducing their burden and increasing their competitive power. It was also conducive to the coordinated development of different social undertakings.

Huang called on actively and prudently pushing forward the work, noting although some progress had been made in this field, the process was rather slow on the whole and heavy tasks remained ahead.

Splitting of these auxiliary units was a complex process that involved various matters and touches the interests of many parties. The three enterprises, which are directly under the central government, would accumulate experiences helpful for streamlining other state-owned enterprises, Huang said.

Previous streamlining efforts had cut staff and workers at state-owned enterprises from 69.7 million in 1997 to 41.9 million by the end of June 2003. However, state-owned enterprises are still running 11,000 primary and high schools and 6,100 hospitals.

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