China Industrial Development Report (2006 Scientific Development Concept and Economic Growth Mode Transformation)

Author: Institute of Industrial Economics, Chinese Academy of Social Sciences
Publisher:
Publish Date: 2006-07-01
Features: The new socialist market economy system in China has been basically established, but it still needs further improvement, and 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 further concentrate state capital in foundational industries related to the lifeline of the national economy and strategic high-tech industries concerning national security, as well as in large enterprises with state monopoly or state control. 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 constraint mechanisms, rather than quantifying corporate assets to individuals. The focus of improving the operational environment of enterprises lies in accelerating the process of aligning the tax systems of domestic enterprises and foreign-invested enterprises, ensuring equal competition between them. Continuing to advance reform and opening-up will provide a more effective institutional guarantee for achieving China's "11th Five-Year Plan" goals for national economic and social development.