China will restructure its 196 major state-owned enterprises (SOEs) according to the law and diversify their shareholders, but they will remain in public ownership, said a top economic official Tuesday.

Li Rongrong, director of the State-owned Assets Supervision and Administration Commission (SASAC), made the remarks in talks with Kwon O-kyu, senior secretary for policy planning of the Republic of Korea.

Kwon O-kyu spoke highly on China's SOE reform and inquired about how China deal with bad assets of enterprises and what SASAC will do next to its major SOEs.

The SASAC's first task was to establish and improve the boards of directors in the SOEs, and diversify the shareholders by encouraging them to sell and transfer shares at home and abroad, Li said.

The gradual establishment of local state-assets management institutions would also promote diversification of the enterprises' shareholders, by facilitating cross-shareholding among local enterprises and major SOEs, he said.

As for the SOEs' bad assets, Li said loss-making SOEs could go bankrupt either according to the law or according to policy.

China's state-owned economy would continue to play a leading role in the national economy no matter how the SOEs were reformed, Li stressed.

Kwon O-kyu appreciated Li's answers and hoped the two countries will have more cooperation in SOEs reform and relevant research.

(Xinhua News Agency July 9, 2003)