Date
25 September 2017
Premier Li Keqiang hopes job growth in high-tech industries can help alleviate the unemployment problem as old-economy sectors cut back excess capacity. Photo: Internet
Premier Li Keqiang hopes job growth in high-tech industries can help alleviate the unemployment problem as old-economy sectors cut back excess capacity. Photo: Internet

Why SOEs find it hard to answer Li’s call for reform

Chinese Premier Li Keqiang is making use of every chance to remind state-owned enterprises to be steadfast in eliminating obsolete and excess capacity.

The repeated message itself is a sign that the country still has a long way to go in achieving the objective.

In a recent visit to Wuhan in central China, the premier talked to a number of SOEs and asked them to push ahead with the reform, slim down their organizations, simplify the too many layers of management, and focus on their core strength rather than getting involved in too many businesses, China Securities Journal reports.

Several companies in the steel and coal industries are even asked to sign a letter of responsibility as a formal pledge to fulfill their missions.

While demanding results, Li is also asking the SOEs to exercise restraint, telling them to ensure that redundancies are given decent retirement benefits. In some cases, SOEs are requested to redeploy excess staff to other positions.

At the root of the slow progress of cutting overcapacity has always been the unemployment issue. Keeping the staff and exiting inefficient operations are in some sense contradictory targets.

Li hopes that job growth in high-tech industries can help alleviate the unemployment problem as old-economy sectors cut back the excess capacity.

The question is how many workers in traditional industries can really migrate into new and more promising sectors.

– Contact us at english@hkej.com

CG

EJ Insight writer

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