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Ailing State-Run Industries Worry Chinese Leaders - 2002-11-10

China's Communist leaders said they will keep state-owned enterprises as the centerpiece of the country's economy. But they are counting on private companies to create badly needed jobs and growth

Top Chinese economic officials say they want state-owned industry to be as efficient as private companies. They say that since 1989, more than half of the country's state-run companies have gone out of business in the restructuring process, throwing 25 million people out of work.

But the minister of the state Economic and Planning Commission, Zeng Peiyan, said the state-owned enterprises are still the backbone of the economy.

Mr. Zeng said China is building a "socialist market economy," which he expects will make state-owned companies more efficient, and help the economy grow.

The comments came during a news conference at the Chinese Communist Party Congress in Beijing, where delegates are expected to approve rule changes allowing private business people to join the party for the first time.

That's a big change from the past, when entrepreneurs were scorned as exploiters of the working class supporters of the Communist Party.

Twenty years of economic reform have made it possible for the number of private companies in China to expand many fold, creating millions of jobs and a very strong economic growth rate. Chinese officials predicted Sunday that their economy will grow by eight percent this year.

Private companies say they could grow even faster, if they got fair treatment from state-controlled banks, which give most loans to state-owned companies.

Senior economic officials say that is changing, and insist that banks and tax collectors will treat both kinds of companies equally.

The officials say the government will play a smaller role in the Chinese economy in the future, regulating industry, but letting market forces allocate most resources.