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Watchdog plans to deal with overcapacity

(chinadaily.com.cn)
Updated: 2009-06-08 17:58

Worried about declines in both operating revenue and profit of State-owned enterprises, China's State-owned Assets Supervision Commission (SASAC) plans to eliminate overcapacity in an effort to optimize State-owned assets.

Shao Ning, Deputy Director of the SASAC, revealed yesterday at a forum in Beijing that overcapacity has become a grim reality as international market demand shrinks and many industries experience oversupply.

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The global financial crisis has taken a heavy toll on the central enterprises as shown by the statistics from the first four months, said Shao.

The operating revenue and profit of central enterprises were down by 9.2 percent and 36 percent respectively in the January-April period, while local State-owned enterprises witnessed declines of 8.4 percent and 58.1 percent in the same fields. The drops were all larger than the average decline of the nation's industrial profits of that time.

Although the nation's stimulus measures have seen some results, it's still hard to say whether the demands created are sufficient to offset the vanished ones, Shao explained, adding that stimulating domestic demands costs a lot.

"Besides stimulating demands, which is what we are doing now, another measure is cutting off surplus productivity," said Shao.

Shao called for reformed bankruptcy procedures so that the eliminated enterprises can quit the market smoothly.