1999-09-22 11:37

Abstract: (Adopted at the Fourth Plenary Session of the 15th Central Committee of the Communist Party of China on September 22, 1999) In order to realize the grand goals of China's reform, opening up, and modernization drive for the next century, as proposed at the 15th National Congress of the Communist Party of China, the Fourth Plenary Session of the 15th Central Committee of the Communist Party of China discussed several major issues concerning the reform and development of state-owned enterprises and made the following decisions. I. Promoting the reform and development of state-owned enterprises is an important and...

( Adopted at the Fourth Plenary Session of the 15th Central Committee of the Communist Party of China on September 22 , 1999 )

In order to realize the grand goals of my country's reform, opening up and modernization for the next century, as proposed at the 15th National Congress of the Communist Party of China, the Fourth Plenary Session of the 15th Central Committee of the Communist Party of China discussed several major issues concerning the reform and development of state-owned enterprises and made the following decisions.

I. Promoting the reform and development of state-owned enterprises is an important and urgent task.

Over the past 50 years since the founding of the People's Republic of China , under the leadership of our Party, the people of all ethnic groups have made unremitting efforts and achieved tremendous success in socialist construction. Our country has transformed from a poor and backward agricultural nation into a socialist country on the verge of entering a moderately prosperous society and striding towards industrialization and modernization. This is a great historical leap in the development of the Chinese nation. State-owned enterprises and the working class have made indelible and significant contributions to this achievement.

Since the Third Plenary Session of the 11th Central Committee of the Communist Party of China, under the guidance of Deng Xiaoping Theory, our Party has opened up a new path for building socialism with Chinese characteristics. To overcome the drawbacks of the traditional planned economy, we have adhered to emancipating the mind, seeking truth from facts, actively exploring, proceeding step by step, and continuously deepening the reform of state-owned enterprises and the entire economic system, thus advancing modernization. Profound changes have taken place in the management system and operating mechanisms of state-owned enterprises. A number of enterprises have grown stronger through market competition, their technological equipment levels have significantly improved, and the output of some important products, mainly produced by state-owned enterprises, has jumped to the forefront of the world. Under the new pattern of public ownership as the mainstay and the common development of diverse forms of ownership, the overall strength of the state-owned economy has been further enhanced, continuing to play a leading role in the national economy and consistently serving as a major source of fiscal revenue, effectively supporting the country's reform and construction. After years of effort, state-owned enterprises have taken unprecedented and significant steps towards the reform goal of establishing a socialist market economy.

The reform of state-owned enterprises (SOEs) is a broad and profound transformation. Currently, the institutional transformation and structural adjustment of SOEs have entered a critical stage, exposing a number of deep-seated contradictions and problems. Due to the long-term influence of the traditional system, numerous historical problems, years of redundant construction, and rapid changes in the market environment, a considerable number of SOEs are still ill-suited to the requirements of a market economy. Their operating mechanisms are inflexible, their technological innovation capabilities are weak, they bear heavy debts and social burdens, they have too many surplus employees, face difficulties in production and operation, declining economic efficiency, and some employees are experiencing financial hardship. Effective measures must be taken to address these problems. This is not only crucial to the success or failure of SOE reform but also to the success or failure of the entire economic system reform. The entire Party must fully recognize the importance and urgency of promoting SOE reform and development, while also being keenly aware of the arduous and long-term nature of this work, persevering relentlessly to achieve continuous breakthroughs.

At the turn of the century, peace and development remained the themes of our time, but hegemonism and power politics saw new developments. Comprehensive national strength increasingly became the dominant factor determining a nation's future and destiny. To enhance our country's economic strength, defense capabilities, and national cohesion, we must continuously promote the development and growth of the state-owned economy. The public sector economy, including the state-owned economy, is the economic foundation of our socialist system, the fundamental force guiding, promoting, and regulating economic and social development, and an important guarantee for realizing the fundamental interests and common prosperity of the vast majority of the people. Firmly implementing the spirit of the 15th National Congress of the Communist Party of China, advancing the reform and development of state-owned enterprises, and comprehensively enhancing the vitality of state-owned enterprises and the control of the state-owned economy are of paramount importance for establishing a socialist market economy, promoting sustained, rapid, and healthy economic development, improving people's living standards, maintaining a stable and united political situation, and consolidating the socialist system.

State-owned enterprises (SOEs) are the backbone of my country's national economy. Developing the productive forces of socialist society and realizing the country's industrialization and modernization always rely on and leverage the vital role of SOEs. In the context of accelerating economic globalization and technological progress, SOEs face increasingly fierce market competition. Development is the fundamental principle. It is imperative to keenly grasp domestic and international economic development trends, effectively transform the economic growth model, expand development space, and quickly cultivate new advantages for SOEs.

The reform of state-owned enterprises (SOEs) is the central link in the overall economic system reform. Establishing and improving the socialist market economy system and achieving an effective combination of public ownership and the market economy hinges on enabling SOEs to develop management systems and operating mechanisms that adapt to the requirements of a market economy. We must continue to emancipate our minds, seek truth from facts, and take the development of socialist productive forces, the enhancement of the comprehensive national strength of the socialist state, and the improvement of people's living standards as the fundamental criteria. We must boldly utilize all operating methods and organizational forms that reflect the laws of modern socialized production, strive to explore diverse forms of public ownership that can greatly promote the development of productive forces, and take new steps in deepening the reform of SOEs.

Improving the reform and development of state-owned enterprises is a crucial foundation for achieving long-term national stability and maintaining social stability. It is imperative to correctly handle the relationship between reform, development, and stability; the intensity of reform and the speed of development must be commensurate with national strength and society's capacity to withstand pressure, striving to create a new situation where reform, development, and stability mutually reinforce each other.

Our Party and our working class have always been courageous in facing and adept at overcoming any difficulties and obstacles. We have the guidance of Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, and the Party's basic line; we have stronger comprehensive national strength than in the past; we have accumulated practical experience over many years; and we have the active participation of the vast number of workers. As long as the whole Party remains steadfast in its confidence and unites in its struggle, we will surely be able to achieve new victories in the reform and development of state-owned enterprises.

II. Main Objectives and Guiding Principles for the Reform and Development of State-Owned Enterprises

The 15th National Congress of the Communist Party of China and the First Plenary Session of the 15th CPC Central Committee proposed that, within about three years, most large and medium-sized state-owned enterprises should be lifted out of their predicament, and that by the end of this century, most large and medium-sized backbone state-owned enterprises should have initially established a modern enterprise system. To advance the reform and development of state-owned enterprises, we must first and foremost strive to achieve this goal. We must proceed from the realities of different industries and regions, and, based on the objective process of unbalanced development, focus on key industries, key enterprises, and old industrial bases, combining the resolution of current prominent problems with long-term development, and creating favorable conditions for the cross-century development of state-owned enterprises.

By 2010 , the goals of state-owned enterprise reform and development were: to adapt to the two fundamental transformations in economic system and economic growth mode and the requirements of expanding opening up to the outside world, to basically complete strategic adjustments and reorganizations, to form a relatively reasonable layout and structure of the state-owned economy, to establish a relatively complete modern enterprise system, to significantly improve economic efficiency, to significantly enhance technological development capabilities, market competitiveness and risk resistance capabilities, and to enable the state-owned economy to play a better leading role in the national economy.

The following guiding principles must be adhered to in advancing the reform and development of state-owned enterprises:

( I ) With public ownership as the mainstay and diverse forms of ownership developing together. Adjust and improve the ownership structure, actively explore various forms of public ownership, enhance the control of the state-owned economy in the national economy, and promote fair competition and common development among various forms of ownership.

( II ) Strategically adjust the layout of the state-owned economy and reorganize state-owned enterprises. With a view to improving the overall state-owned economy, promote the rational flow and restructuring of state-owned assets, adjust the layout and structure of the state-owned economy, actively develop large enterprises and enterprise groups, and liberalize and revitalize small and medium-sized enterprises.

( III ) Combining reform with reorganization, transformation, and strengthened management. Adapting to the requirements of the market economy, we will focus on transforming enterprise operating mechanisms, improving the overall quality of enterprises, and constructing the micro-foundation for optimized industrial structure and efficient economic operation.

( iv ) Establish a modern enterprise system. Achieve clear property rights, well-defined rights and responsibilities, separation of government and enterprise, and scientific management. Improve the decision-making, execution, and supervision systems to make enterprises independent legal entities and market players that operate autonomously and are responsible for their own profits and losses.

( V ) Promote technological progress in enterprises. Strengthen enterprises' scientific research and development and technological transformation, attach importance to scientific and technological talents, promote the integration of industry, academia and research, form a technological innovation mechanism, and follow an intensive and sustainable development path.

( vi ) Strengthen enterprise management in all aspects. Promote scientific management, strengthen basic work, improve operations, increase efficiency, implement multiple distribution methods with distribution according to work as the main principle, and form an effective incentive and constraint mechanism.

( vii ) Establish a competitive mechanism for the survival of the fittest among enterprises. Implement projects that encourage mergers and acquisitions, regulate bankruptcies, facilitate layoffs and reassignments, reduce staff and increase efficiency, and promote re-employment. Rely on all sectors of society to expand employment opportunities and ensure the basic livelihood of laid-off workers from state-owned enterprises.

( VIII ) Coordinate and advance various supporting reforms. Transform government functions, establish a clearly defined system for the management, supervision, and operation of state-owned assets, and ensure the preservation and appreciation of state-owned assets. Strengthen the rule of law and maintain market economic order. Improve the social security system. Help enterprises increase capital, reduce debt, and alleviate burdens.

( ix ) Rely wholeheartedly on the working class and give full play to the political core role of the enterprise's Party organization. Strengthen the construction of the enterprise's Party organization and ideological and political work, improve the quality of the enterprise's management team, uphold and improve enterprise democratic management with the workers' congress as the basic form, and earnestly safeguard the legitimate rights and interests of workers.

( X ) Promote the development of corporate ethics and culture. Strengthen ideological and moral education and technical and business training, comprehensively improve the quality of the workforce, cultivate a positive corporate culture, and promote the coordinated development of material and ethical progress.

III. Strategically Adjusting the Layout of the State-Owned Economy

Under the socialist market economy, the leading role of the state-owned economy in the national economy is mainly reflected in its control. ( I ) The role of the state-owned economy should be realized not only through wholly state-owned enterprises, but also through the vigorous development of the shareholding system and the exploration of state-owned holding and shareholding enterprises. ( II ) The state-owned economy occupies a dominant position in important industries and key areas related to the lifeline of the national economy, supporting, guiding, and driving the development of the entire social economy, and playing an important role in achieving the national macroeconomic control objectives. ( III ) The state-owned economy should maintain a necessary quantity, but more importantly, its distribution should be optimized and its quality improved; at different stages of economic development, the proportion of the state-owned economy in different industries and regions can vary, and its layout should be adjusted accordingly.

Strategic adjustments to the layout of the state-owned economy must be combined with the optimization and upgrading of the industrial structure and the adjustment and improvement of the ownership structure, adhering to the principle of selective expansion and contraction, and focusing on what should be done and what should not be done. Currently, the state-owned economy is too widely distributed, its overall quality is not high, and its resource allocation is not entirely rational, which must be addressed. The industries and sectors that the state-owned economy needs to control mainly include: industries involving national security, natural monopolies, industries providing important public goods and services, and key backbone enterprises in pillar industries and high-tech industries. Other industries and sectors can be addressed through asset restructuring and structural adjustments, concentrating resources, strengthening key areas, and improving the overall quality of the state-owned economy. While adhering to the principle of state-owned and collective ownership as the mainstay, the development of individual and private non-public ownership economies should be encouraged and guided. With the continuous development of the national economy, the state-owned economy has broad development space; its total size will continue to increase, its overall quality will further improve, and its distribution will become more rational, but its proportion in the overall national economy will decrease. As long as public ownership remains the mainstay, the state controls the lifeline of the national economy, and the control and competitiveness of the state-owned economy are enhanced, this decrease will not affect the socialist nature of our country.

Actively explore various effective forms of realizing public ownership. State-owned capital can attract and organize more social capital through the shareholding system, amplifying its functions and enhancing the control, influence, and driving force of the state-owned economy. Large and medium-sized state-owned enterprises, especially those with advantages, that are suitable for the shareholding system should be transformed into shareholding companies through standardized listing, Sino-foreign joint ventures, and cross-shareholding among enterprises, developing a mixed ownership economy, with key enterprises being state-controlled.

We must make overall plans and adopt effective policies to accelerate the adjustment of the layout of state-owned economy in old industrial bases and the central and western regions. For old industrial bases facing significant difficulties, the state should increase support in areas such as technological upgrading, asset restructuring, structural adjustment, and the resettlement and social security funding for laid-off workers from state-owned enterprises. The state should support the accelerated development of the central and western regions and ethnic minority areas through measures such as prioritizing infrastructure construction and increasing fiscal transfer payments. The state should implement the Western Development Strategy. The central and western regions should, based on their own conditions, develop industries with comparative advantages and technologically advanced enterprises to promote the optimization and upgrading of their industrial structures. While accelerating reform and development, the eastern region should, based on the principles of mutual benefit, complementary advantages, and common development, support and promote the economic development of the central and western regions through industrial transfer, technology transfer, counterpart assistance, and joint development.

IV. Promoting the Strategic Restructuring of State-Owned Enterprises

Since the reform and opening up, the organizational structure of state-owned enterprises (SOEs) has undergone positive changes, but it remains irrational. The main problem is severe duplication of construction; enterprises are either large and self-sufficient or small and self-sufficient, failing to form specialized production, socialized cooperation systems, and economies of scale, thus lacking market competitiveness. Strategic restructuring of SOEs should continue, differentiated by situation. For the very few enterprises that must be state-monopolized, the state should provide necessary support while striving to adapt to the requirements of a market economy, enabling them to better fulfill their due functions. Enterprises with a certain strength in competitive sectors should attract investment from multiple parties to accelerate development. For enterprises with marketable products but excessive burdens and operational difficulties, asset restructuring and structural adjustments should be carried out through mergers and acquisitions to revitalize existing assets. Enterprises with no market for their products, long-term losses, no hope of turning a profit, and depleted resources, as well as small coal mines, small oil refineries, small cement plants, small glass plants, and small thermal power plants that waste resources, have outdated technology, produce low-quality products, and cause serious pollution, should be bankrupted or closed.

We must adhere to the principle of "focusing on the large and letting go of the small." We should strive to cultivate large enterprises and enterprise groups with strong capabilities and high competitiveness, some of which can become large enterprise groups operating across regions, industries, ownership structures, and countries. We should leverage the advantages of these enterprises in capital operation, technological innovation, and market expansion, making them pillars of the national economy and major forces in international competition. The development of enterprise groups must follow objective economic laws, with enterprises as the main body and capital as the link, formed through the market. It cannot be forced through administrative means, nor can it be blindly pursued in a large-scale or comprehensive manner. Efforts should be focused on highlighting core businesses and enhancing competitive advantages.

Revitalize and invigorate state-owned small and medium-sized enterprises (SMEs). Actively support SMEs, especially technology-based enterprises, encouraging them to develop in a specialized, refined, distinctive, and innovative direction, establishing close cooperative relationships with large enterprises, and improving the socialization level of production. Based on reality, continue to adopt various forms of revitalization and invigorate state-owned small enterprises, including restructuring, mergers, acquisitions, leasing, contracting, shareholding cooperatives, and sales, avoiding a single model. Support and guide the large number of shareholding cooperative enterprises that have emerged in recent years, continuously summarizing experiences to gradually improve them. Sales must be conducted strictly in accordance with relevant national regulations. Regardless of the form of revitalization and invigoration adopted, employee opinions must be considered, operations must be standardized, and effectiveness must be emphasized. Give full play to the important role of SMEs of all ownership types in revitalizing urban and rural economies, meeting diverse social needs, absorbing labor employment, developing new products, and promoting national economic development. Cultivate a service system for SMEs, providing them with services such as information consulting, market development, financing, loan guarantees, technical support, and talent training.

In the process of strategic restructuring of state-owned enterprises, the role of market mechanisms should be fully utilized, and economic, legal, and necessary administrative measures should be comprehensively applied. In mergers and acquisitions involving changes in ownership, asset appraisals should be standardized to prevent the loss of state-owned assets, prevent the evasion of bank debts and national taxes, properly resettle employees, and protect their legitimate rights and interests.

V. Establishing and improving a modern enterprise system

Establishing a modern enterprise system is an inevitable requirement for developing large-scale socialized production and a market economy, an effective way to combine public ownership with the market economy, and the direction for the reform of state-owned enterprises. We must proceed from my country's national conditions, summarize practical experience, and, in accordance with the decisions of the Third Plenary Session of the 14th CPC Central Committee and the statements in the report of the 15th CPC National Congress regarding the establishment of a modern enterprise system, fully understand and grasp the requirements of clear property rights, well-defined responsibilities, separation of government and enterprise, and scientific management, and focus on the following key aspects.

( I ) Continue to promote the separation of government and enterprise. For enterprises funded and owned by the state, the government, through its investor representatives, exercises the functions of owner, enjoying rights such as asset benefits, major decision-making, and the selection of managers according to its investment amount. The government bears limited liability for the enterprise's debts and does not interfere in the enterprise's daily operations. Enterprises operate independently according to law, pay taxes as required, and bear the responsibility for preserving and increasing the net assets of the owners, and must not harm the owners' rights. Party and government organs at all levels must completely sever ties with the economic entities they run and the enterprises they directly manage in terms of personnel, finances, and resources.

( II ) Actively explore effective forms of state-owned asset management. Following the principles of state ownership, tiered management, authorized operation, and division of responsibilities for supervision, a system and mechanism for the management, supervision, and operation of state-owned assets should be gradually established, along with a sound and rigorous accountability system. The State Council, on behalf of the state, exercises unified ownership of state-owned assets. The central and local governments manage state-owned assets at different levels, authorizing large enterprises, enterprise groups, and holding companies to operate state-owned assets. It is essential to ensure that investors are in place. Local pilot programs are permitted and encouraged to explore specific methods for establishing state-owned asset management. The system of special inspectors will continue to be piloted. At the same time, the spirit of the 15th National Congress of the Communist Party of China should be actively implemented, and the supervisory board system should be improved and standardized, transitioning to strengthening supervision of state-owned enterprises from a systemic and institutional perspective to ensure that state-owned assets and their rights are not infringed upon.

( III ) Implement standardized corporate reforms for large and medium-sized state-owned enterprises. The corporate system is an effective organizational form of modern enterprise systems. Corporate governance structure is the core of the corporate system. The responsibilities of the shareholders' meeting, board of directors, board of supervisors, and management should be clearly defined to form a corporate governance structure where each entity is responsible for its own tasks, operates in a coordinated manner, and effectively checks and balances each other. Owners have ultimate control over the enterprise. The board of directors must safeguard the rights and interests of investors and is responsible to the shareholders' meeting. The board of directors makes decisions on the company's development goals and major business activities, appoints managers, and assesses and evaluates their performance. The supervisory board plays a supervisory role over the company's finances and the behavior of directors and managers. The Party committee leaders of wholly state-owned and state-controlled companies can enter the board of directors and board of supervisors through legal procedures; employee representatives must participate in both the board of directors and board of supervisors; Party members in charge of the board of directors, board of supervisors, management, and trade unions can enter the Party committee in accordance with the Party Constitution and relevant regulations; the Party secretary and chairman can be the same person, while the chairman and general manager should, in principle, be separate positions. The board of directors should play a unified decision-making role on major issues, and the supervisory board should provide effective supervision. Party organizations should perform their duties in accordance with the Party Constitution, and trade unions and employee representative assemblies should perform their duties in accordance with relevant laws and regulations. Diversified shareholding is conducive to the formation of a standardized corporate governance structure. Except for a very few enterprises that must be operated by the state monopoly, we should actively develop companies with diversified investment entities.

( IV ) Focusing on Market-Oriented Transformation of Enterprise Management Mechanisms. A mechanism should be gradually established that ensures the survival of the fittest among enterprises, allows for the promotion and demotion of managers, the entry and exit of personnel, the increase and decrease of income, continuous technological innovation, and the preservation and appreciation of state-owned assets. An income distribution system adapted to modern enterprise systems should be established. Under the guidance of national policies, the board of directors and management should receive remuneration according to their respective responsibilities and contributions; the wage levels of enterprise employees should be determined by the enterprise based on the local average wage and the enterprise's economic performance; the principle of distribution according to work should be implemented within enterprises, with appropriate disparities, allowing and encouraging the participation of capital, technology, and other factors of production in income distribution. Concrete measures should be taken to address the problem of excessively high personal income in certain monopolistic industries.

VI. Strengthen and improve enterprise management

Strengthening enterprise management and improving scientific management are inherent requirements for establishing a modern enterprise system and important ways for state-owned enterprises to turn losses into profits and enhance competitiveness. We must attach great importance to and effectively strengthen enterprise management, strictly manage enterprises, achieve management innovation, and quickly change the situation in a considerable number of enterprises where decision-making is arbitrary, systems are lax, discipline is loose, and management levels are low.

Strengthen research on enterprise development strategies. Enterprises must adapt to the market, formulate and implement clear development strategies, technological innovation strategies, and marketing strategies, and adjust them in a timely manner according to market changes. Implement scientific and democratic decision-making to improve decision-making standards. Strengthen risk management to avoid major mistakes.

Improve and refine all rules and regulations. Strengthen basic work and thoroughly change the situation where there are no rules to follow, rules are not followed, and violations go unpunished. Establish a strict accountability system at all levels and in all aspects, strengthen assessment and supervision, and ensure that every task has someone responsible. Improve the labor contract system, promote competitive recruitment for all employees, strictly enforce labor discipline, clearly define rewards and punishments, and give full play to the enthusiasm and creativity of employees. Enhance legal awareness and operate and manage in accordance with the law.

We must address weaknesses in management, focusing on cost management, capital management, and quality management. Establish and improve a nationally unified accounting system. Balance sheets, profit and loss statements, and cash flow statements must be prepared promptly to accurately reflect the company's operating status. We must effectively improve and strengthen economic accounting, plugging all loopholes. We must adhere to the principle of quality first, adopt advanced standards, and implement comprehensive quality management involving all employees and all processes. We must prioritize prevention, implement safety measures, and ensure safe production. We must attach importance to the management, protection, and rational utilization of the company's intangible assets. We must combine strengthened management with anti-corruption efforts, strengthening auditing and supervision of the company's economic activities, resolutely stopping and severely punishing acts such as falsifying accounts, violating financial discipline, embezzlement, and wasteful spending.

We will widely adopt modern management technologies, methods, and tools. We will summarize past effective management experiences and continuously enrich them with new meaning. We will promote the management experience of advanced enterprises, introduce foreign expertise, and learn from modern management methods used by foreign companies. We will leverage the role of management experts to provide consulting services for improving the company's operations and management. We will strengthen the application of modern information technology and establish a sensitive and accurate information system. We will rationally set up internal organizational structures to change the situation of large management organizations and excessive management personnel.

VII. Improve the asset and liability structure of state-owned enterprises and reduce their social burden.

Gradually addressing the problems of excessively high debt ratios, insufficient capital, and heavy social burdens of state-owned enterprises (SOEs) is crucial for achieving the goals of SOE reform and development. These issues should be addressed systematically and in stages, taking into account the macroeconomic environment and national financial resources, and different situations.

( i ) Increase banks' provisions for writing off bad debts, primarily for the mergers and bankruptcies of large and medium-sized state-owned enterprises and the closure of depleted mines, with a focus on key industries. State-owned and collective enterprises merging with state-owned enterprises can enjoy relevant incentive policies. All merged, bankrupt, and closed enterprises must properly resettle their employees in accordance with relevant national regulations.

( II ) In conjunction with the reform of centralized handling of non-performing assets by state-owned banks, debt-to-equity swaps will be implemented through financial asset management companies and other means for key state-owned enterprises whose products have market potential and development prospects, but are in distress due to excessive debt, to address the problem of excessively high debt ratios. Enterprises implementing debt-to-equity swaps must transform their operating mechanisms, undergo standardized corporate reforms, and be subject to independent review by financial asset management companies. Operations must be conducted in accordance with market economy principles and relevant regulations to prevent a rush to implement such swaps and the loss of state-owned assets.

( III ) Increase the proportion of direct financing. State-owned enterprises that meet the listing requirements can raise capital through domestic and overseas capital markets and appropriately increase the proportion of publicly traded shares. Some enterprises can list after meeting the requirements through debt restructuring. State-owned and state-controlled enterprises are allowed to participate in stock placements in accordance with regulations. Some reputable and high-potential state-controlled listed companies will be selected, and, without affecting state control, a portion of state-owned shares will be appropriately reduced, with the proceeds used by the state for the reform and development of state-owned enterprises. The stock issuance and listing system should be improved to further promote the healthy development of the securities market.

( iv ) With approval, non-listed companies may transfer land use rights allocated to them by the state for consideration and realize corporate assets, with the proceeds used for capital increase, debt reduction, or structural adjustment. This must be done strictly in accordance with national laws and regulations, adhering to the principles of openness, fairness, and impartiality, and safeguarding the rights and interests of the state as the owner and banks and other creditors.

( V ) Strictly implement national interest rate policies and effectively reduce the interest burden on enterprises. Banks should reasonably determine loan terms to support enterprises' reasonable funding needs, and promptly correct any unreasonable loan terms; they should not arbitrarily increase or disguise loan interest rates under any pretext beyond the prescribed limits; for enterprises with high credit ratings, in line with national industrial policies, and with low loan risks, loan interest rates may be appropriately reduced.

( vi ) Large state-owned enterprises with debt repayment capacity may issue corporate bonds within the quota approved by the state after evaluation by qualified intermediary institutions. Some may also issue bonds overseas with approval. All forms of illegal fundraising are strictly prohibited.

( VII ) Separate social functions from enterprises and effectively reduce the social burden of state-owned enterprises. Enterprises located in cities should gradually transfer their schools, hospitals, and other social service institutions to local governments for unified management. The necessary expenses can be shared by enterprises and the government for a certain period, gradually transitioning to government responsibility, and some can be converted into enterprise-based operations. Independent industrial and mining areas should also strive to create conditions to separate social service institutions from enterprises. Governments at all levels should take measures to actively promote this work.

Improving the asset-liability structure of state-owned enterprises and reducing their social burden must be combined with preventing and resolving financial risks, and with deepening internal enterprise reforms, establishing new mechanisms, and strengthening scientific management, so as to prevent the recurrence of old problems after the original burdens have been shed.

8. Do a good job in reducing staff and increasing efficiency, re-employment and social security.

Layoffs, downsizing, efficiency improvements, and re-employment are important aspects of state-owned enterprise (SOE) reform. Downsizing should be organically combined with efficiency improvements to reduce enterprise costs and increase efficiency and profitability. SOEs with suitable conditions are encouraged to separate core and auxiliary businesses, reassign employees, and establish independently accounting, self-financing economic entities to resettle surplus personnel and alleviate social employment pressure. Layoff procedures should be standardized, enterprise re-employment service centers should be well-run, and the basic living standards of laid-off workers should be effectively guaranteed to maintain social stability. Layoffs and reassignment must be commensurate with national financial resources and social affordability. The structure of fiscal expenditures should be adjusted, adhering to a system of shared responsibility among enterprises, society, and the government to ensure funding. For loss-making enterprises where social fundraising is insufficient, the government should guarantee the remaining amount. For local governments facing genuine financial difficulties, the central government should provide support through transfer payments. The systems of basic living security for laid-off workers, unemployment insurance, and urban residents' minimum living allowance should be further improved, ensuring the seamless integration of these three safety nets and effectively implementing policies to guarantee the basic living standards of laid-off workers and the unemployed.

We must vigorously promote re-employment. We should adopt effective policies and measures to broaden employment opportunities and increase job positions. We should actively develop the tertiary sector to absorb more laid-off workers. We should guide workers to change their job-seeking attitudes and make great efforts to train laid-off workers, improving their re-employment capabilities. We should further improve preferential policies to promote the re-employment of laid-off workers, encouraging them to work in non-public economic units, organize their own employment, or engage in self-employment, so that those who need re-employment can quickly find new jobs. For those who choose self-employment, we should provide more support in areas such as business registration, site allocation, tax and fee reductions, and financial loans. We must actively develop and regulate the labor market, forming a market-oriented employment mechanism.

Accelerating the construction of a social security system is a crucial condition for the smooth progress of state-owned enterprise reform. The coverage of social insurance programs such as old-age, unemployment, and medical insurance should be expanded in accordance with the law. All types of enterprises, including urban state-owned, collective, foreign-invested, and private enterprises, and their employees, must participate in social insurance and pay social insurance premiums. The collection of social insurance premiums should be strengthened, the collection rate increased, and overdue social insurance premiums from enterprises cleared and recovered to ensure timely and full payment of pensions. The provincial-level pooling system for basic old-age insurance should be further improved to enhance the fund's adjustment capacity. Various measures should be taken, including realizing some state-owned assets and rationally adjusting the structure of fiscal expenditures, to explore new financing channels for social security and replenish the social security fund. All social security funds must be strictly managed, supervision strengthened, and misappropriation strictly prohibited to ensure the safety and appreciation of the funds. The socialized management of social security should be gradually promoted, separating retirees from their original enterprises, with pensions paid by social service agencies and personnel managed by communities. The political and living benefits of retired enterprise cadres should be conscientiously implemented, and management and service work should be carried out effectively.

IX. Accelerate technological progress and industrial upgrading of state-owned enterprises

To achieve sustained, rapid, and healthy development of the national economy, it is essential to adapt to the global trend of industrial restructuring and changes in domestic and international market demands, and to accelerate technological progress and industrial upgrading. The crucial position of the state-owned economy in the national economy dictates that state-owned enterprises must take the lead in technological progress and industrial upgrading, actively explore new development opportunities, and play a key role.

The direction and focus of technological progress and industrial upgrading in state-owned enterprises are: market-oriented, using advanced technologies to transform traditional industries, strengthening the technological transformation of existing enterprises by focusing on increasing variety, improving quality, increasing efficiency, and expanding exports; occupying an important position in emerging and high-tech industries such as electronic information, bioengineering, new energy, new materials, aerospace, and environmental protection, mastering core technologies, occupying the commanding heights of technology, and playing a leading role. It is crucial to properly handle the relationships between improving quality and increasing output, developing technology-intensive and labor-intensive industries, independent innovation and technology import, and economic development and environmental protection.

Through technological progress and industrial upgrading, a few large enterprises and enterprise groups should reach or approach the world's advanced level in terms of product quality, process technology, production equipment, and labor productivity, and occupy a certain share in the international market; a number of enterprises and enterprise groups should have a high level of technology, be able to produce high value-added products, and have strong competitiveness in domestic and foreign markets; and most enterprises should continuously carry out technological transformation and product upgrading, give full play to my country's abundant labor force, and actively participate in domestic and foreign market competition.

We will adopt proactive and effective policies to support enterprise technological progress and industrial upgrading. In particular, we must take advantage of the current favorable situation of the country's proactive fiscal policy and expansion of domestic demand, concentrate necessary resources to increase investment in technological upgrading in key industries, key enterprises, key products, and the manufacturing of major advanced equipment, with a focus on old industrial bases, to achieve significant results in enterprise technological progress and industrial upgrading. For technological upgrading projects that have a market, are profitable, and conform to national industrial policies, we will provide loan interest subsidies; for investments in domestically produced equipment for such technological upgrading projects, we will implement tax incentive policies. We will cultivate and develop industrial investment funds and venture capital funds. We will make full use of domestic and international capital markets to raise funds to support enterprise technological upgrading, structural adjustment, and the development of high-tech industries. We will implement incentive policies to promote the transformation of scientific and technological achievements and actively develop the technology market. We will continue to adopt policies such as accelerated depreciation, increased extraction of new product development expenses, and reduction or exemption of tariffs and import taxes on imported advanced technologies and equipment to encourage enterprises to carry out technological upgrading.

Enterprises are the main drivers of technological progress and industrial upgrading; a technology innovation system centered on enterprises must be established. Enterprises should strengthen their technological development capabilities and increase investment. Large enterprises should establish technology development centers to research and develop leading products with independent intellectual property rights, increase technological reserves, and improve the training of technical personnel. The integration of industry, academia, and research should be promoted, encouraging research institutions and universities to engage with enterprises and enterprise groups, strengthening the development and promotion of applied technologies, increasing investment in intermediate testing, and promoting the transformation of scientific and technological achievements into real productive forces. Joint efforts should be organized to tackle major technical challenges, emphasizing the role of scientific and technological experts. Incentive mechanisms should be established to attract talent and motivate scientific and technological personnel, and intellectual property rights should be protected.

10. Create a favorable external environment for the reform and development of state-owned enterprises.

The reform and development of state-owned enterprises is a complex social system project that requires effective macro-control and related supporting reforms.

( I ) Maintain a basic balance in the overall economy. Expand domestic demand, develop urban and rural markets, increase employment, promote the sustained, rapid and healthy development of the national economy, prevent large fluctuations in economic growth, and create a favorable macroeconomic environment for the development of state-owned enterprises.

( II ) Continue to expand opening up to the outside world. Promote and improve a comprehensive, multi-level, and wide-ranging pattern of opening up. Encourage state-owned enterprises to make rational use of both domestic and international markets and resources to enhance their international competitiveness. Actively introduce advanced technologies, focusing on digestion, absorption, and innovation. Optimize the structure of import and export commodities, implement market diversification, and expand foreign trade. Improve the investment environment, expand the utilization of foreign investment, and raise the level of foreign investment utilization. State-owned enterprises with the necessary conditions should leverage their comparative advantages to establish enterprises abroad and explore international markets; the state should provide necessary policy support and strengthen supervision.

( III ) Curbing Unreasonable Duplication of Construction. Accelerate the reform of the investment and financing system, establish an investment risk constraint mechanism, and strictly implement the project capital system and the project legal person responsibility system, ensuring that whoever makes the decision bears the responsibility and risk. The government should guide investment through the formulation of industrial policies and the release of information, encouraging funds to be directed towards projects that improve technological levels and whose products have marketability and profitability. New projects where domestic production capacity clearly exceeds market demand must be strictly controlled.

( IV ) Developing various markets and maintaining normal economic order. Continue to improve commodity markets, cultivate and develop factor markets, and establish a unified national market system conducive to the rational flow of goods, capital, technology, and labor. Improve market rules, regulate market behavior, strengthen market supervision, eliminate administrative barriers that divide and block markets, and create a fair and competitive market environment. Take effective measures to promptly resolve the issue of mutual arrears between enterprises, strengthen the concept of credit, and strictly enforce settlement discipline. Severely crack down on smuggling, the production and sale of counterfeit and substandard goods, and other economic crimes in accordance with the law. Promote tax and fee reform, clean up and rectify arbitrary charges, fines, and various apportionments, and effectively reduce the burden on enterprises.

( V ) Improve the intermediary service system. Social intermediary service organizations must be completely separated from government departments. The behavior of social intermediary organizations such as accountants, lawyers, notaries, asset appraisers, and consultants should be standardized to ensure objectivity, truthfulness, and impartiality. Those who engage in fraudulent activities will be held accountable and punished according to law. Various industry associations should be rectified and standardized, and industry self-regulation strengthened.

( VI ) Establish and improve the legal system for the socialist market economy. We must expedite the formulation and improvement of laws and regulations concerning maintaining market order, implementing macro-control, regulating market entities, and improving social security. We must strengthen and improve judicial and administrative law enforcement and supervision. We must punish, according to law, illegal and criminal acts that infringe upon the legitimate rights and interests of enterprises. We must strengthen comprehensive social security management to create a favorable social environment for enterprise production and operation.

XI. Building a high-quality team of business managers

To adapt to the requirements of establishing a modern enterprise system and survive and develop in fierce market competition, state-owned enterprises (SOEs) must build a high-quality management team and cultivate a large number of outstanding entrepreneurs. The management team of SOEs is generally good and has made significant contributions to enterprise reform and development. Developing a socialist market economy places higher demands on SOE managers. They should possess: strong ideological and political qualities; conscientiously implement the Party and the state's policies, laws, and regulations; have a strong sense of responsibility and dedication; possess strong management capabilities; be familiar with their industry; have a systematic grasp of modern management knowledge; possess basic knowledge of finance, technology, and law; be adept at making scientific decisions based on market changes; abide by laws and regulations; be honest and self-disciplined; be pragmatic and realistic; and maintain close ties with the masses.

Deepen the reform of the personnel system in state-owned enterprises. Adhere to the principle of the Party's management of cadres and improve management methods. The central and local Party committees should strengthen the management of the leadership teams of key backbone enterprises related to national security and the lifeline of the national economy. Methods for the training, selection, management, assessment, and supervision of managers should be established according to the characteristics of enterprises, and gradually institutionalized and standardized. Actively explore new mechanisms for selecting and appointing personnel that adapt to the requirements of modern enterprise systems, combining organizational assessment and recommendation with the introduction of market mechanisms and open recruitment to the public, and combining the principle of the Party's management of cadres with the board of directors' legal selection of managers and the managers' legal exercise of their personnel rights. Further improve the specific methods for managing the leaders of state-owned enterprises to avoid multiple management within a single team. Administrative ranks will no longer be determined for enterprises and their leaders. Accelerate the development of a talent market for enterprise managers and establish a talent pool for enterprise management. Optimize the allocation of talent resources according to the principles of openness, equality, competition, and merit, breaking down departmental ownership and departmental barriers to talent management and promoting the rational flow of talent. Strengthen education and training in various forms to comprehensively improve the quality of managers. Continue to hold and standardize business administration training, improve training content and methods, and enhance training quality. We should strive to create conditions and foster a social environment conducive to the healthy growth of managers and entrepreneurs.

Establish and improve incentive and constraint mechanisms for managers of state-owned enterprises. Link managers' income to the enterprise's operating performance. Combine material incentives with spiritual incentives, ensuring managers receive compensation commensurate with their responsibilities and contributions, while also promoting a spirit of dedication, publicizing and recognizing outstanding contributors, and protecting the legitimate rights and interests of managers. A few enterprises may pilot annual salary systems for managers ( factory directors ) and equity holdings; this can be further explored, and experiences summarized promptly, but should not be adopted indiscriminately. Standardize managers' compensation and increase transparency. Strengthen and improve the supervision mechanism, combining external and internal supervision. Improve corporate governance structures, leverage the roles of Party supervision and employee democratic supervision, and strengthen supervision of enterprises and managers on major issues such as capital operation, production and operation, income distribution, personnel decisions, and integrity. Establish a performance evaluation system and a system for holding individuals accountable for decision-making errors. Implement economic responsibility audits for enterprise leaders during their terms of office; those who cause significant losses to the enterprise due to illegal or irregular human factors should be held accountable according to law and disqualified from holding leadership positions or being reassigned.

XII. Strengthen the Party's leadership over the reform and development of state-owned enterprises.

Strengthening and improving the Party's leadership is the fundamental guarantee for accelerating the reform and development of state-owned enterprises (SOEs). To improve SOEs, it is essential to establish a leadership system and organizational management system that conforms to the laws of the market economy and my country's national conditions, strengthen the construction of enterprise leadership teams, give full play to the political core role of enterprise Party organizations, and adhere to the principle of wholeheartedly relying on the working class. It is necessary to combine leveraging the Party's political advantages with utilizing market mechanisms, mobilizing the enthusiasm of all parties, forming a synergy, and ensuring the smooth completion of the tasks of SOE reform and development.

Upholding the Party's leadership and giving full play to the political core role of Party organizations in state-owned enterprises is a fundamental principle that must never be shaken. The political core role of Party organizations in enterprises is mainly manifested in: ensuring and supervising the implementation of the Party and state's policies within the enterprise; participating in decision-making on major enterprise issues and supporting the shareholders' meeting, board of directors, board of supervisors, and manager ( factory director ) in exercising their powers according to law; wholeheartedly relying on the workers and leading and supporting trade unions, the Communist Youth League, and other mass organizations, as well as the workers' congress, to carry out their work independently and autonomously in accordance with the law and their respective charters; leading the enterprise's ideological and political work and the construction of spiritual civilization, striving to build a workforce with ideals, morality, culture, and discipline; strengthening the Party organization's own construction, conducting education on Party spirit and conduct, and giving full play to the fighting fortress role of Party branches and the vanguard and exemplary role of Party members. Enterprise Party organizations must conscientiously implement the Party's basic line, conduct work around production and operation, and serve the realization of the Party's tasks and the enterprise's reform and development. They must continuously improve the content and methods of their work and activities, and further explore ways and methods to give full play to their political core role. They must strengthen and improve ideological and political work, unite the masses with the common ideal of building socialism with Chinese characteristics, guide the vast number of workers to actively support and participate in reform, and enthusiastically help them solve practical difficulties. Party organizations of struggling enterprises and those undergoing mergers and bankruptcies should especially conduct thorough and meticulous work among the masses.

To ensure the successful reform and development of state-owned enterprises, it is essential to genuinely respect the workers' status as masters of the enterprise and fully unleash their enthusiasm, initiative, and creativity. We must resolutely safeguard the economic interests of workers and guarantee their democratic rights. We must further streamline labor relations, conduct equal consultations in accordance with the law, and conscientiously implement the labor contract and collective bargaining agreement systems. We must give full play to the role of trade unions and workers' congresses in democratic decision-making, democratic management, and democratic supervision. We must uphold and improve the enterprise democratic management system with workers' congresses as its basic form, implement democratic appraisal of enterprise leaders, and promote transparency in factory affairs. We must strengthen the building of the workforce. We must persist in arming the vast majority of workers with Deng Xiaoping Theory and the Party's basic line, vigorously promote patriotism, collectivism, socialism, and the spirit of hard work and entrepreneurship, conduct in-depth education on the current situation and tasks, and the rule of law, and guide workers to establish correct worldviews, outlooks on life, and values. We must strengthen the training of workers in professional skills and labor skills. We must strengthen the building of enterprise spiritual civilization, develop enterprise culture, widely carry out activities to create civilized industries, civilized enterprises, civilized work teams, and strive to become civilized workers, establish good professional ethics and work style of dedication, honesty, trustworthiness, and contribution to society, advocate scientific spirit, oppose feudal superstition, and continuously improve the ideological, moral, scientific, and cultural qualities of workers.

Party committees and governments at all levels must firmly stand at the forefront of state-owned enterprise reform, emancipate their minds, seek truth from facts, follow objective economic laws, and respect the pioneering spirit of the masses. They must earnestly improve their leadership style, proceed from the realities of state-owned enterprises in various sectors such as industry, transportation, commerce, and finance, conduct in-depth investigations and research, summarize new experiences, study new situations, solve new problems, and unite and lead the vast number of cadres and the masses to overcome difficulties and forge ahead.

The plenary session called on the entire Party to unite closely around the Party Central Committee with Comrade Jiang Zemin at its core, hold high the great banner of Deng Xiaoping Theory, thoroughly implement the spirit of the 15th CPC National Congress, and, in accordance with the unified deployment of the Central Committee, work together with one heart and one mind, strive hard, work diligently, and unswervingly achieve the goals of reforming and revitalizing state-owned enterprises, strive to create a new situation in the reform and development of state-owned enterprises, and comprehensively advance the great cause of building socialism with Chinese characteristics into the 21st century!