CONFIDENTIAL
state-owned sector
these measures,
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were also promulgated(5).
Following
be
the state-owned enterprises could
expected to become more autonomous and business-oriented in their activities in the future. With the resultant improvement in operational efficiency and profitability of these enterprises, less assistance would be required from
the State than at present.
5.
Given that energy and key raw materials were primarily supplied by state-owned enterprises, it was not surprising to see a relatively slower growth in the outputs
(5)
In July 1992, the State Council promulgated the Regulations for Transformation of Operating Mechanism of State-owned Enterprises, which were aimed primarily at increasing the autonomy of state-owned enterprises in such areas as import and export, investment, labour, pricing and marketing of products, disposition of retained funds and other assets, internal organisation, and amalgamation and formation of joint ventures with other organisation. The Regulations imposed
imposed obligations on state-owned enterprises to maintain the value of assets and make profits.
Specifically, those enterprises which incurred an operating loss for one year or more would be penalised, for example by a reduction in the total staff emoluments and a suspension of bonus to the management. Conversely, additional bonus would be awarded for reversing the operating loss within a specified period. State-owned enterprises which suffered losses due to price control or other reasons under state policy could receive compensation in the form of subsidies, subject to the approval of the Ministry of Finance.
GF 323
CONFIDENTIAL ##
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