http://www.thecapitaltimes.com/edit%20-%20banking%20-%20102699.htm
Tom
Yoshie Furuhashi wrote:
> Lou asked me to send this to lbo. Those of you who have already received
> the same post from Lou's marxism list and/or PEN-L, please bear with me.
> Yoshie
>
> ***** Date: Tue, 26 Oct 1999 18:59:09 -0400
> To: marxism at lists.panix.com, pen-l at galaxy.csuchico.edu,
> leninist-international at buo319b.econ.utah.edu
> From: Louis Proyect <lnp3 at panix.com>
>
> Louis,
>
> Please post this on the Marxism list, LBO and Pen-l. It is an example of
> the struggle going on in influencing Chinese economic policy. Sorry I am
> too busy to be a subscriber. Hope to be able to return after a while.
>
> The full name of Jainyi is omitted because he used to be a Foreign Ministry
> official.
>
> Regards,
>
> Henry
> *************************************************************************
>
> Henry:
>
> I completely agree with you. In my article delivered to one of the
> members of the standing committee of the politbureau of CPC in last April,
> I explained with ample examples and history of state-owned enterprises both
> in China and West (including the US and western european countries), and
> with theories, too, that the success of an enterprise has nothing to do
> with the ownership structure but with the corporate governance and
> management of the enterprise. During my approxmiately three years' of
> research, I discussed this issue with over one hundred Chinese and foreign
> experts, scholars and managers, most of them agreed with me after
> discussion. I remember vividly my discussions with a senior vice president
> of a Fortune 500 company and he agreed with me. I feel that the Chinese
> leaders are just trying to hide their failure in managing the state-owned
> enterprises behind the so-called reform theories. Because they do not have
> the skill, knowledge and courage needed to govern, improve and manage the
> state-owned enterprises.
>
> The task we are facing now is how to make our views (which I think
> are correct) known to the Chinese people and leaders. We need to do
> something.
>
> Best regards.
>
> Jianyi
>
> >----------
> From: Henry C.K. Liu 'ù¤l¥ú[SMTP:hliu at mindspring.com]
> Sent: Monday, October 25, 1999 11:45 PM
> Subject: SOE Reform
>
> The Decision on Some Major Issues Concerning the Reform and Development of
> State-Owned Enterprises (SOEs) adopted by the Fourth Plenary Session of the
> 15th Central Committee of the Communist) Party of China (CPC) made several
> assumptions that may not necessarily be valid.
>
> 1) It assumes that private corporations are more efficient than state-own
> enterprises. This is not always true. Experience in the US has shown that
> efficiency of an enterprise is the result of good or bad management, rather
> than whether an enterprise is publicly or privately owned. Accountability
> for management must be present in any enterprise. It can be introduced
> regardless of the type of ownership. Privatization is not a panacea.
> Russia is full of examples where privatization has resulted in total
> paralysis of many critical sectors of the Russian economy.
>
> 2) It is a myth that market economy is more productive than centrally
> planned economy. That myth had been promoted by Reagan/Thatcher. That
> myth requires the exploitation of an underdeveloped third world to carry
> the advanced economies. As a developing economy, following market
> fundamentalism will only condamn China to the rank of the exploited in the
> US led globalization regime.
>
> 3) Private ownership is not socially benign. Once a nation permits the
> privatization of the means of production, the road to socialism becomes
> obscure. Privatization is not economically more efficient. It only
> appears so because private corporations are not required to assume social
> responsibilities.
>
> The Chinese state-owned enterprises need reform. But it is doubtful that
> privatization is the answer. An accountable mangement system in which
> managers are rewarded and punished according to performance is needed. But
> that does not require private ownership. There are many companies in the
> US that operates on mutual ownership, owned by the customers, like a
> cooperative. A well-known example is the Prudential Insurance Company of
> America, the 3rd largest insurance company in the US.
>
> Henry
>
> >From the People's Daily
>
> Establishment of Modern Enterprise System-Orientation of SOE Reform
>
> This article is written by Chen Qingtai on what he has gained from studying
> the Decision of the Fourth Plenum of the 15th CPC Central Committee. The
> article runs in part as follows:
>
> The Decision on Some Major Issues Concerning the Reform and Development of
> State-Owned Enterprises (SOEs) adopted by the Fourth Plenary Session of the
> 15th Central Committee of the Communist) Party of China (CPC) once again
> stresses: "Establishment of a modern enterprise system is the inevitable
> requirement for the development of socialized mass production and a market
> economy, the effective way for integrating the system of public ownership
> with the market economy and the orientation of the reform of State-owned
> enterprises."
>
> Problems Needed to Be Resolved in the Establishment of a Modern Enterprise
> System
>
> 1. Realizing the separation of ownership from the property right of the
> enterprise's legal person, enabling the enterprise to become an independent
> mainstay of the market.
>
> 2. Establishing a limited liability system, changing the debt
> responsibility relationship between the State and the enterprise.
>
> 3. The diversification of stock rights helps put owners' functions in place
> and form a power mechanism and risk restraint mechanism for the enterprise.
>
> 4. Establishing a State-owned enterprise asset circulating mechanism
> through reform in line with a corporation system.
>
> 5. Widening financial channels and enlarging the functions of State-owned
> capital.
>
> 6. Establishing an enterprise corporate management structure, forming a
> scientific and rational enterprise leadership structure and an
> organizational system. Several Difficult Problems Needed to Be Resolved in
> Establishing a Modern Enterprise System Since it is necessary to
> comprehensively solve the deep-seated institutional problems of State-owned
> enterprises through the establishment of a modern enterprise system, then
> system innovation is by no means an easy matter. Simply changing
> State-owned enterprises into firms cannot solve any problems.
>
> Judging from the establishment of a modern enterprise system in selected
> areas, enterprise system innovation requires that supporting reforms must
> be done well. The Decision calls for mainly tackling the following four
> links:
>
> 1. Continuing to promote the separation of the government from the enterprise.
>
> The separation of the government from the enterprise means: First, the
> government, as the manager of the macro-economy, no longer directly
> intervenes in the daily operational activities of the enterprise; second,
> as the owner, the government must, through a set of systems, arrange
> representatives of the owner to enter the enterprise and ensure that power
> and function are in place; third, the government undertakes the functions
> of social management and public service, and must create conditions for
> relieving enterprises of the function of running social undertakings.
>
> 2. Actively exploring effective forms for the management of State-owned assets.
>
> 3. Conducting reform of large and medium-sized State-owned enterprises in
> line with a standard corporate system.
>
> (1) More State-owned enterprises should be restructured into diversified
> share-owners' limited liability companies.
>
> (2) The company's corporate management structure is the heart of the
> corporate system.
>
> 4. Market-oriented transformation of the operational mechanism.
>
> The effects of enterprise system innovation are embodied in the operational
> mechanism that suits the market economy.
>
> Louis Proyect
> Marxism mailing list: (http://www.panix.com/~lnp3/marxism.html)