Its target is for an 8 percent growth rate in each of the next five years to raise SOAs from 406.7 billion yuan (US$49 billion) in 1999 to 650 billion yuan (US$78.3 billion) by 2005,

"Efforts will be made to increase SOAs' shares in high technology, backbone industries and urban infrastructure sectors," said a report to the ongoing Fourth Plenary Session of the city's 11th People's Congress.

By 2005, shares will occupy 50 percent of the total local SOAs, up from the current 44 percent.

The city's strategy is to augment SOAs in large local conglomerates which will then become "a major force" in competing with their counterparts at home and abroad, the report said.

"To reach this objective, tough measures should be taken to speed up the readjustment of the city's State-owned economy," the report said.

At the same time, each State-owned enterprise must further restructure itself to enhance its ability to absorb capital.

The report suggested "an overall program be worked out as soon as possible to keep the restructuring work in order."

Funds should be set up to provide financial support for the restructure of the local economy.

Shanghai began to restructure its SOAs in 1993. By 1997, it had set up five large conglomerates to produce chemicals, power station equipment, home appliances and automobiles. Now more than 1,000 State-owned enterprises have become bankrupt and been annexed by others.

Following the restructuring, agriculture now accounts for only 4 percent of the city's SOAs, the industrial sector makes up 36 percent and the tertiary industry takes up 60 percent.

Over the next five years, the local government will continue to reduce its stakes in small and medium-sized State-owned enterprises which will be sold, merged or auctioned on the capital market, the report said.

"By doing so, the local government will give up its control over these enterprises to create an environment in which multi-ownership can develop," the report said.

(China Daily 02/12/2001)