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China sets rules on foreign role in state reforms

SHANGHAI: China has set rules on foreign participation in the restructuring of state-owned companies, the official Shanghai Securities News said on Saturday.

The State Economic and Trade Commission had issued guidelines requiring any restructuring involving more than $100 million in foreign investment to be approved by the State Council, the cabinet, the newspaper reported.

Projects with overseas investment of $30 million to $100 million should be approved by the commission itself, it said.

Restructuring projects with investment below $30 million could be approved by the provincial government, the newspaper said.

Lower-level government officials had no authority to approve foreign participation in state sector restructuring, it said.

Foreign companies which took part in restructuring of state firms must put their investment in place within three months after receiving their business licenses, the newspaper said.

With special approval, foreign firms could invest 60 percent of pledged funds within six months and the rest in another six months, it said.

Chinese Vice Minister of Foreign Trade and Economic Cooperation Sun Zhenyu said last month that China would open wider to foreign investment, including allowing foreign investors to participate in the restructuring of state companies.

Beijing is striving to reform its ailing state sector through mergers, acquisitions and even bankruptcies.

CHINA TO LIST STATE SHARES SOLD TO THE PUBLIC

China's first two listed firms to sell a portion of their state shares to the public will list the stock next week, the companies said on Saturday.

Motorcyle maker China Jialing Industry Co will list 100 million former state shares on the Shanghai stock exchange on Tuesday, the company said in a statement in the Shanghai Securities News.

The sale reduced the government's stake in the company to 53.66 percent from 74.76 percent, it said.

In a separate statement, Guizhou Tyre Co said it would list 17.1 million former state shares on the Shenzhen stock exchange on Wednesday. The sale cut the state's share in the company to 51 percent from 57.53 percent, it said.

The two companies took the lead in China's landmark sales of state shares to public shareholders in December.

Most Chinese listed companies are state-owned and have sold only a portion of their shares to the public.

China decided last year to select a handful of companies to sell state shares to the public on an experimental basis and to gradually reduce the average stake of the state in listed companies to 51 percent from 62 percent.

In addition to China Jialing and Guizhou Tyre, eight other companies -- including Shanghai Lujiazui Finance and Trade Zone Development Co are planning such sales.

But sales of state shares by China Jialing and Guizhou Tyre fell flat, with investors failing to take up all of the shares on offer due to high pricing, analysts have said.

State shares that were not bought by individual investors were bought by mutual funds or underwriters.

CHINA ECONOMY SEEN GROWING 7.5 PC IN 2000

BEIJING: China's economy is expected to grow 7.5 percent in 2000 compared to 7.1 percent in 1999, with exports rising betwen eight and 10 percent this year, the China Daily said on Saturday.

The newspaper quoted economists from the Chinese Academy of Social Sciences as saying deflation was fading as government stimulus measures took effect, and holiday consumption and tourism would boost the economy this year.

Large-scale development in China's relatively backward western regions would also stimulate economic growth in 2000, it said.

Economic recovery in Asia and strong demand from Europe and the United States would boost China's exports, it said.

China's economy grew a provisional 7.1 percent last year largely due to massive state spending on roads, bridges and other infrastructure projects funded by bond issues.

State media have quoted a senior Chinese government economist as saying China's exports would top $210 billion this year, up from a provisional $195 billion in 1999.-Reuters