December 22, 1995

Promising Developments in China on Employee Ownership

NCEO founder and senior staff member

Prospects for employee ownership continue to look promising in China. As we have already reported, several local governments have been privatizing enterprises they own through employee ownership. Employees are also being allowed to buy limited numbers of shares in enterprises owned by the central government (very large or politically sensitive business, for the most part). The central government has been reluctant to privatize these enterprises, however. Now a report in the Wall Street Journal (12/19/95) says that of the 100,000 enterprises owned by the central government, only 1,000 will be preserved on the socialist model. The rest will be sold, merged, or closed. That process will probably move slowly, but the first experiments in it have occurred in Zucheng in Shandong province (one of China's most economically active areas). Enterprises there are being transferred to their employees.

The NCEO is coorganizing a large conference on enterprise reform in China next May. It is being cosponsored by major international accounting and employee benefit firms and the leading organizations in the Chinese enterprise reform effort. For more information on the conference, contact Veronica Manson at the NCEO.