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$60B in China Idle Equipment Cited

April 30, 2000

BEIJING (AP) _ China’s government industries have $60 billion worth of idle equipment, an official newspaper reported Sunday, in an indication of the troubles in bringing market reforms to long-protected state enterprises.

The more than $60 billion in idle factory equipment accounts for nearly 8 percent of the assets of state enterprises, the China Daily reported. The sum is also more than six percent of China’s $990 billion economy.

Chinese officials have acknowledged the waste and duplication that has accompanied the often chaotic transformation from central planning to free markets. Last year, factories were warehousing so many goods the government put price floors on a range of products and imposed investment limits on some sectors.

But the China Daily report was one of the rare instances in which the government has put a price on the inefficiency of state industries.

``We must make full use of existing equipment to prevent the waste of state assets,″ the China Daily quoted Zeng Peiyan, minister for development and planning, as saying. Zeng is supposed to oversee economic policies and government investments to reduce wasteful duplication.

The amount of unused equipment has grown under a program to revive state industries that has seen more than 6,400 firms merged or bankrupted in the past three years, the newspaper said in its Business Weekly editions.

Shanghai _ China’s business capital often praised as a model for its transformation from planning to markets _ last year had idled equipment worth $2.4 billion, the newspaper said.

The report quoted the China Association of Equipment Management as saying that much of the idled machinery can be reused. The group has sponsored an annual trade fair since 1991 to stimulate sales.

Business, however, has been slack in part because of a 17 percent transaction tax levied by the government, the newspaper said.

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