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406 51 Don’t Start a Fad When Implementing a Shareholding System1 September 10, 1997 the 7th Plenary Session of the 14th central committee of the Party that ended yesterday approved the report of the 14th central committee to the 15th national Party congress and the “revised constitution of the communist Party of china.” these two important documents highlighted deng Xiaoping’s theories and at the same time contained new theoretical developments, particularly innovations in the theory of ownership. that is, the components of public ownership are not limited to enterprises under state ownership and collective ownership. in enterprises of non-public ownership, shares that are state-owned or collectively owned should also be counted as components of public ownership . everyone agreed with this argument, but in the past it was not spelled out. now it has been made official and explicit. Some people say that the proportion of Soes [among all enterprises] is getting smaller and smaller. When i transferred to the State council in 1991, Soes accounted for 55% of the industrial sector, collectively owned enterprises accounted for about 35–36%, and various non–publicly owned enterprises such as private and foreign-invested enterprises accounted for less than 10%. More than 90% of enterprises were publicly owned. under the current situation, it seems that Soes account for only one-third; the proportion of collectively owned enterprises hasn’t changed, still being about one-third; and Sino-foreign joint ventures and private enterprises also account for one-third. the [enterprise ]“kingdom”is now divided into three parts—this is a very great change. We can expect the proportion of Soes to continue to decline. if we do not provide a clear theoretical response to this situation, some people will feel that the forces of socialism have been weakened and the degree of privatization is increasing. the report presented by the 14th central committee to the 15th national Party congress contains unprecedented elaborations on public ownership as 1. this is part of a speech given by zhu rongji at zhongnanhai in Beijing when he met with the participants at a seminar on tax reforms and development for provincial-level officials. the seminar was jointly organized by the chinese Academy of governance, the Ministry of Finance, and the State Administration of taxation. Don’t Start a Fad When Implementing a Shareholding System 407 the main component [of socialism], on the state-owned economy as the guiding force, and on the ways in which the state-owned economy plays its role as a guiding force. that is, the main point is not the proportion of public ownership, but rather its ability to control. how should we define shareholding enterprises? A shareholding system is a form of enterprise organization. it can be used under both capitalism and socialism—the key is who controls the shares. if a controlling interest is publicly owned, then this enterprise is still primarily a publicly owned enterprise. the Party central committee has discussed this issue many times, but if we were to simply say that shareholding enterprises whose controlling interests are state or collectively owned are publicly owned enterprises, then this would be inconsistent with the definition in the “constitution” stating that publicly owned enterprises consist of Soes and collectively owned enterprises, but the time has not yet come to revise the “constitution.” therefore the report presented by the 14th central committee to the 15th national Party congress handles this very adroitly, in that it regards shareholding enterprises with publicly owned controlling interests to clearly classify as public ownership. this way, the boundaries of the “constitution” have not been exceeded, but there is a breakthrough [in the interpretation of] the original concept. i feel that this is a theoretical innovation. My purpose in talking about this question is to ask you to convey a message to the leaders of your provincial Party committees when you go home: don’t rush to follow a fad after the 15th national Party congress. Although there is an innovation in the theory of ownership, this doesn’t mean that they should start a fad for shareholding after the 15th national Party congress. if this is what they turn their attention to, then they don’t have an all-round understanding of the documents of the 15th national Party congress. in fact, this fad has already started. Some local leaders are proposing to complete a shareholding cooperative system as quickly as possible; some locales have even been holding meetings at every level to...

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