2006-Report on the Development of China's Industry-Scientific Outlook on Development and Transformation of Economic Growth Mode

Author: Institute of Industrial Economics, Chinese Academy of Social Sciences
Publisher:
Publish Date: 2006-07-01
Features: China's socialist market economy has basically established a new system, but it still needs to be further improved. The task of deepening reforms remains arduous. It is necessary to continue advancing the strategic restructuring of state-owned enterprises, shrink the scope of state-owned economy, and concentrate state capital further into foundational industries critical to the national economy and strategic high-tech industries related to national security, as well as into large enterprises with state monopoly or majority ownership. Most competitive medium-sized enterprises should become mixed-ownership enterprises with diversified capital structures, while a large number of small enterprises should be privatized. The reform of the investment system should focus on: first, improving market access rules; second, the government must withdraw from investment activities in operational industries; third, strengthening the responsibility of state-owned enterprises as investment entities for bearing investment risks, as well as the credit mechanism for private enterprises using bank loans. The institutional innovation of state-owned and state-controlled large enterprises should prioritize establishing a principal-agent system that adapts to market economy requirements, forming a market-based selection mechanism for managerial personnel, and establishing effective incentive and restraint mechanisms, rather than quantifying corporate assets to individuals. The focus of improving the business and production environment of enterprises lies in accelerating the process of aligning the tax systems of domestic enterprises and foreign-invested enterprises, ensuring equal competition between domestic and foreign-invested enterprises. Continuing to advance reform and opening-up will provide a more effective institutional guarantee for achieving China's National Development Plan for the 11th Five-Year Plan for national economic and social development goals.