A: Welcome back to Listeners Garden. I'm LPC.

B: And I'm JP. In today's review of China's reform and opening up, we'll take a look at the reform of the state-owned enterprises, or SOEs, in the past 30 years.

A: Prior to the economic reform in the late 1970s, the central government exerted strict controls over the economy.

B: All enterprises were publicly owned and managed. They bore a closer resemblance to workshops than to independent economic units, and were required to execute government plans and submit all profits to the state.

A: The lack of autonomy led to low efficiency and poor performance in most enterprises.

B: After China initiated the economic reform 30 years ago, efforts were made to reform the inefficient state-owned enterprises.

A: The reform of state-owned enterprises is the key link of China's economic restructuring, but it's also the hardest nut to crack in the economic reform process.

B: In 1979, the State Council issued a series of documents on an experimental program designed to increase economic incentives for state firms by expanding their autonomy in enterprise management and operation.

A: The reform kicked off with the endeavor to loosen government administration and delegate more decision-making powers to the enterprises in terms of production, sales and profit allocation. The initial reform changed their longstanding passive reliance on government planning and fired up their initiative and creativity in improving performance."

B:  In the mid-1980s, as the contract responsibility system piloted in rural areas proved successful in promoting agricultural development, the practice was introduced in SOE reforms.

A: The contract system contributed a great deal to enhancing the vitality and efficiency of many poorly run enterprises, but as China transformed from a highly planned economy to a market-oriented economy, most state-owned enterprises were still under-performing and less competitive compared to the phenomenal growth of the private companies.

B: As a result, more effective endeavors were needed to deepen the reform and establish new management and operational mechanisms that suited the demands of the market economy.

A: In 1993, the Party adopted the Decision on Issues of Building a Socialist Market Economy. It pointed out that the objective of SOE reforms was to set up the modern enterprise system.

B: The late 1990s witnessed a full-scale transformation of state-owned enterprises into shareholding companies. By the end of 2000, about 80 percent of state enterprises had established a modern corporate system, and most of the struggling companies had begun turning profits.

A: In the meanwhile, the state carried out a strategic readjustment of the layout of the state-owned economy.

B: Measures were taken to enhance SOEs' competitiveness in priority sectors crucial to the development of the national economy, and withdraw enterprises from fields where they were less advantageous and competitive compared to the non-public sectors.

A: Through various means of restructuring, over the past ten years, the number of state-owned enterprises has dropped by 50 percent to 110,000, but their general assets have increased by 150 percent. This year, 19 state-owned enterprises in China ranked in the Fortune 500 list.

B: The reform significantly improved the overall vitality and competitiveness of state-owned enterprises. Although the number of state companies is declining annually, the comprehensive strength of the public economy has been greatly enhanced. Last year, state-owned enterprises contributed to one-third of the country's total tax revenue.

A: Well, that's all we have for today's review of China's reform and opening up over the past 30 years.