China to stop bailing out state businesses
BEIJING - The Chinese government is to end its practice of bailing out bankrupt state firms, state media reported.
The practice will be halted "when the condition is ripe", Xinhua news agency said, quoting an executive meeting of the State Council or cabinet.
Beijing, Shanghai and the coastal provinces of Jiangsu, Zhejiang and Fujian already refuse bailouts, the report said.
Currently, the government will step in to subsidise failing state businesses in return for assurances that the
firms will provide for the workers who are laid off.
By last April, 3,377 bankrupt state firms had been closed by administrative intervention and 6.2 million employees resettled, Xinhua said. It cost 49.3 billion yuan (six billion dollars) in subsidies with 223.8 billion yuan written off by state banks.
Li Rongrong, minister in charge of the Assets Supervision and Administration Commission (Sasac), was quoted as saying earlier that the transition period would be about four years.
"Meanwhile, enterprises with the right conditions are encouraged to merge with others," Xinhua said, quoting from the meeting.
AFP bday.co.za |
