To enhance accountability, China set up assets-supervision agencies at the provincial level by the end of last year; and the agencies are expected to be further expanded to the city and county levels this year, said Li Rongrong, chairman of the State-owned Assets Supervision and Administration Commission.

Government departments should also have a clear perspective on SOE restructuring and remove unnecessary administrative hurdles, said Li.

SASAC, itself a result of the reform of State-asset management, now acts on behalf of the State as the owner of the 189 central and biggest SOEs.

"SASAC represents the State as an investor, so it should not shoulder administrative functions of the government,'' said Li. "Strictly speaking, we are not government officials.''

But many of the SOEs are still to shed most of the policy burden loaded on them during the planned economy, which has led to problems like irrational allocation of resources; redundant labor; and low efficiency and competitiveness.

Moves to slice off the social welfare and public-service functions of SOEs are already underway. Many of them are transforming their schools and hospitals into independent institutions.

"We aim to build 30-50 big State enterprise groups with international competitiveness,'' said Li.

"Many of the rest would have to undergo drastic changes to survive.''

There are more than 2,500 big- and medium-sized SOEs and depleted mines currently on the verge of bankruptcy, involving 5.1 million employees and more than 240 billion yuan (US$29 billion) of creditor's rights.

Li estimated that it would take another four years to them to entirely exit the market.

(China Daily January 5, 2004)