DATE=1/25/2000
TYPE=CORRESPONDENT REPORT
TITLE=CHINA / STATE ENTERPRISES (L ONLY)
NUMBER=2-258405
BYLINE=ROGER WILKISON
DATELINE=BEIJING
CONTENT=

VOICED AT:


INTRO:  One of China's top economic officials says the 
country's ailing state-owned enterprises are returning 
to profitability.  But, as VOA correspondent Roger 
Wilkison reports, the official acknowledges that -- as 
restructuring of the firms proceeds -- unemployment is 
bound to increase.

TEXT:  Sheng Huaren -- the minister in charge of 
China's State Economic and Trade Commission -- says he 
is confident the government will achieve its goal of 
getting most large state-owned enterprises out of debt 
by next year.

Mr. Sheng says layoffs and management reforms 
increased profits of major state-owned industries last 
year by 70 per cent, to nearly 11 billion dollars.  He 
says the year 2000 will be crucial in preparing those 
firms for survival in a market economy.  But he says 
he expects profits of the state sector to be even 
higher this year.

In late 1997, China's ruling Communist Party proposed 
overhauling the creaky state sector as part of its 
efforts to modernize the economy.  Though state firms 
now account for only about half of China's gross 
domestic product, they still dominate key sectors and 
employ most of the country's urban workforce.  But the 
government has made clear that many of those companies 
will be merged or allowed to fail.

Speaking through an interpreter, Mr. Sheng's vice-
minister Jiang Qiangui told a Beijing News conference 
that intensifying the restructuring of state companies 
will lead to further unemployment.

            //INTERPRETER ACTUALITY//

There will still be enterprises, which will withdraw 
from the market through closures and bankruptcy, and 
enterprise workers will continue to be laid off.

            //END ACTUALITY//

Ms. Jiang says that, of 11 million workers laid off 
last year, more than half have not yet found jobs.  
She says China's urban unemployment rate is now just 
over three per cent, but most independent estimates 
are that joblessness is at least twice that figure.

Mr. Sheng says the government's major weapon in 
turning state firms around is an ambitious debt-for-
equity swap that is aimed at clearing the firms' bad 
debt.  One Chinese newspaper -- The Economic Daily -- 
has criticized the program, saying it has stalled 
because of resistance by local officials who refuse to 
close down loss-making companies because they are 
afraid of creating unemployment.

But Mr. Sheng says 78 companies have so far converted 
more than 13 billion dollars in non-performing loans 
from state-owned banks into shares.  He acknowledges 
that is only a fraction of the two thousand firms that 
have applied to join the program. But he says the 
asset management companies set up by the banks to 
manage the swap have set stringent conditions for 
participants in the scheme.

Foremost among them -- says Mr. Sheng -- is good 
management and the ability of the companies to sell 
their products in the market. (SIGNED)


NEB/RW/GC/FC



25-Jan-2000 05:26 AM EDT (25-Jan-2000 1026 UTC)
NNNN

Source: Voice of America
.