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IV. Continuing to Advance Reforms and Bringing

About Comprehensive Improvement in Management

To meet the objective set by the CPC Central Committee to establish and improve a socialist market economy, we should continue to implement reforms which provide a powerful driving force for pushing forward structural adjustment, improving economic performance and bringing about sustained, rapid and sound development of the national economy.

Reform of state-owned enterprises is a key link in our efforts to deepen economic restructuring. The top priority for this year's government work is to implement the decision made at the Fourth Plenary Session of the Fifteenth CPC Central Committee in September 1999 to attain the goal set for a three-year period, that is, to turn around most of the large and medium-sized state-owned enterprises operating at a loss and implement a preliminary modern enterprise system in most key large and medium-sized state-owned enterprises. No time should be lost in setting standards for a modern enterprise system suited to China's conditions, which all enterprises should follow. The enterprise management system should be reformed; the way enterprises are operated should be changed; and corporate management structure should be optimized. Inspection and supervision over large and medium-sized state-owned enterprises should be improved, and the board of supervisors system should be gradually consolidated and standardized. Boards of supervisors should be assigned to state-owned enterprises according to law to examine the financial dealings of enterprises, exercise supervision over the members of the boards of directors and managers performing their duties, and safeguard the rights and interests of the owners of state assets. The senior managerial staffs in key state-owned enterprises need to be strengthened. The way enterprise groups manage their subsidiary companies needs to be further improved to make the system of a parent company and its subsidiaries meet the standards of a modern enterprise system. Restructuring of the labor, personnel and income distribution systems of enterprises needs to be deepened to establish incentive and restraint mechanisms. A number of enterprises with good economic performance should experiment with the annual salary system, stock options and other methods of income distribution for managers and factory directors. Measures for increasing the amount of capital reserves available to write off non-performing loans and bad debts in banks, carrying out debt-to-equity swap programs in enterprises where conditions permit, and increasing the proportion of capital raised by enterprises through direct financing should be carefully implemented. The asset-liability ratios of state-owned enterprises should be improved to help firms operating at a loss get out of the red. Strategic restructuring of the state sector of the economy should proceed steadily. Ways of effectively instituting multiple forms of public ownership should be vigorously explored. Large and medium-sized state-owned enterprises to which the stockholding system is applicable should make use of the stock market and quickly implement stockholding system reforms. In addition to striving to develop those large enterprise groups that are internationally competitive, we should also realistically work to relax control over small and medium-sized state-owned enterprises in a variety of ways. The establishment of a service system for medium-sized and small enterprises should be accelerated. While keeping the public sector of the economy in the dominant position, sound development of the non-public sector, including self-employed and private businesses, should be encouraged.

The central authorities' guiding principles and policies on the reform of the grain distribution system should be further implemented. The government will continue to purchase surplus grain from farmers at protective prices without limit. The policy of setting higher prices for better quality grain products should be conscientiously implemented to promote improvement in the mix of grain varieties. The State Council has decided to exclude some varieties of grain from price protection in line with supply and demand, and the need to improve the mix of grain varieties, and government policy should be adjusted accordingly. Sustained efforts in this area should be focused on reform of state-owned enterprises engaged in grain purchase and marketing, promoting of the separation of government functions from enterprise management, changing the way enterprises are operated and reducing costs as much as possible. We should review our experience in this field and improve our policies and measures for the reform of the grain distribution system.

The reforms of finance, taxation, banking, investment, funding, income distribution and the circulation of goods should continue to proceed in an orderly fashion. The central authorities have formulated guidelines for the reform of urban housing, medical insurance, pharmaceuticals and health care. Governments of all provinces, autonomous regions and municipalities directly under the central government should make their own decisions and arrangements in this regard in light of local conditions.

The central authorities have defined the major policies on reform and development, and a number of important laws and regulations have been promulgated. To ensure that these policies, state laws and regulations are observed to the letter, it is imperative that management be tightened, putting strict observance above all else. The time has come when we must take decisive action against sloppy management, indiscipline and disorder, which have become rampant in production, construction and circulation of goods, as well as against the lax execution of laws, decrees and regulations seen in some localities and government departments. These problems seriously hinder the implementation of the guiding principles and policies of the central authorities and the progress of various reforms. All departments under the State Council and local governments at all levels should make it a priority this year to improve their administration in the spirit of reform. Institutions and enterprises in all sectors, including industry, agriculture, finance, taxation, banking, trade, science, technology, education, culture and public health, should also make great efforts to improve their management. Better management encompasses both strengthened supervision and rectification of problems.

Scientific management of enterprises should be conscientiously strengthened. All enterprises should have strict internal management, improve their quality, and pay close attention to weakness in their cost management, fund management and quality control. They should formulate correct strategies for enterprise development, technological innovation and marketing in line with changes in both domestic and world markets. They should rely on their employees and bring their initiative into full play. They should also improve their system of democratic management and make enterprise affairs more transparent. In particular, the basic work of enterprise management needs to be improved to end practices seen in some enterprises such as keeping bogus account books and the reporting of inaccurate figures and distorted information, and to pu

（责任编辑：中大编辑）

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