--Minister in Charge of the State Economic and Trade Commission Sheng Huaren and Minister of Labor and Social Security Zhang Zuoji met the press during the Third Session of the Ninth NPC. Minister Sheng declared that major progress has been made in the reform of SOEs and the effort to lift SOEs out of difficulties. He also answered questions on the future development of individual and private economies in China. Minister Zhang said effective guarantee has been provided for the basic living standards of laid-off workers, and efforts will be intensified this year to expand re-employment.

At the press conference, the two ministers respectively answered questions on the progress and prospect of SOE reform and the effort to help SOEs get rid of difficulties and the guarantee for the basic living standards of SOE laid-off employees.

Minister Sheng said 1999 was the crucial year for SOE reform and turning around SOEs in difficulties. Facing the complicated domestic and international economic environment, the Chinese Government put into practice a series of major policies and measures to stimulate economic growth and improve the operation of SOEs. Through the concerted efforts of all quarters, major progress has been made in SOE reform and the effort to lift SOEs out of difficulties. The economic returns of SOEs have improved significantly. The Government has advanced and smoothly put into practice a series of major policies and measures, such as transferring debts into equity, financial interest discount, and intensifying the merger and bankruptcy of enterprises. SOEs have made further efforts to transform their operational mechanisms and reinforced internal management, and the State has intensified the supervision and management of SOEs. The Government has continued to implement the proactive fiscal policy, expand domestic demand, crack down on smuggling and rectify the market order, helping further improve the external environment for enterprises.

Sheng said the achievements made last year in SOE reform and turning around SOEs in difficulties were initial results. SOEs still face arduous tasks to fulfill the goals of completing their reform and getting rid of difficulties within three years. This year is the decisive year for SOE reform and the effort to lift SOEs out of difficulties. As long as we further implement related measures put forward in Premier Zhu Rongji' s government work report, particularly strengthening enterprise management in an all-round way, implementing in real earnest the series of policies and measures on improving SOEs and maintaining the good momentum of SOE reform and difficulty relief, the set three-year goals can be achieved, assured Sheng.

When asked to explain the emergence of new loss- making enterprises while some large and medium-sized SOEs have turned from losses into profits or eliminated losses, Sheng listed three reasons for the phenomenon. First, under a market economy, it is normal for enterprises to make profits or entail losses. The emergence of new loss-making enterprises is even unavoidable under the circumstances that the enterprise structure is irrational and there is an urgent need to readjust the organizational structure of enterprises. Second, 40 percent of the newly emerging loss-making enterprises are those with small amount of losses of less than 1 million yuan. With limited amount of losses, it is not difficult to turn them around. Some of these enterprises fail to report the truth of their profits and losses, in an attempt to enjoy preferential policies granted to loss-making enterprises. Third, the incomplete social security system and the failure in establishing the enterprise withdrawal mechanism prevent some enterprises that should be eliminated from withdrawing from the market timely. The readjustment of the enterprise organizational structure, an arduous task, needs a process. Sheng stressed that while continuing the work to help original loss-making enterprises to turn around, energetic efforts will be made to solve the problem of new loss-making enterprises. New ideas should be explored. Those that can be rescued shall be saved and those that cannot or should not be saved should be merged, declared bankruptcy or closed down in the endeavor to make strategic readjustment of the State economy and carry out the strategic reorganization of SOEs. Enterprises that should be eliminated must be allowed to withdraw from the market under the precondition of maintaining social stability.

On the question concerning the future development of individual and private economies in China, Sheng said it is China' s basic economic system to ensure the public ownership remain as the mainstay and the joint development of diversified forms of ownership. At present, the majority of Chinese enterprises belong to the public ownership. He believes that in a few years, a large number of big non-public enterprises will have emerged in China.

The guarantee for the basic living standards of laid- off workers drew the concern of many reporters. Minister Zhang Zuoji said Premier Zhu Rongji laid down clear requirements for the "two guarantees' , he put forward in his government work report, requiring the guarantee for the basic living standards of laid-off employees and the guarantee for the pension of enterprise retirees both in time and in full amount. Last year, the country registered 11.74 million laid-off employees from SOEs, of whom 4.92 million found new jobs and more than 90 percent received basic living allowances. The Government also raised the basic living allowances for SOE laid-off employees, the unemployment benefits and the minimal living allowances for urban residents by 30 percent.

Zhang predicted that this year the number of SOE laid-off workers would equal that of last year . His ministry will put the focus of this year' s work on guaranteeing the basic living standards and promoting the re-employment of SOE laid-off workers. First, the set fund raising principles will be carried out seriously to ensure the basic living standards of laid-off workers. Second, intensified efforts will be made to expand re-employment. More employment opportunities will be created through the energetic development of the tertiary industry on the precondition of maintaining a certain speed of economic development. Various preferential policies on promoting re-employment will be carried out in real earnest. Third, the unemployment insurance mechanism will be improved to keep the registered urban unemployment rate under 3.5 percent.