China Emerging_ 1978-2008 - Xiao-bo , Wu [39]
The recovery of the Chinese economy was the result of the collective ascent of newly established enterprises. Old-brand and old-style state-owned enterprises had indeed fallen off a cliff. What happened in Shanghai is a microcosm of the situation elsewhere. From 1990 to 1999, Shanghai steadily implementedastrategicurbantransformationpolicythataimedtoabolishthe secondarysectoroftheeconomyanddevelopthetertiarysector.Oldindustrial enterprises were either disbanded or moved away from the city center, which was an extremely difficult and painful process. The textile industry, in particular, was hit hard. In total, forty-one bankrupt textile enterprises were closed down, 200 other old enterprises were sold, and what had been a total of 2.5 million cotton spindles was reduced to 700,000. Six hundred thousand factory workers were laid off, most of them females. During the 1990s, the unemploymentrateinShanghaiincreasedatanaverageannualrateof9.53%. The highest rate of increase—13.17% every year—was between the years 1990 and 1995, and this only included people who had actually registered as unemployed. There was a similar situation in other old industrial areas of China.ItmustbenotedthatmillionsofemployeesofChina’solderenterprises paid a huge price for the reform of China’s urban economies.
Meanwhile, the state-owned enterprises were desperate to grab what was known as the “last fistful of rice.” The government had determined that the way to save these moribund entities was to restructure them and list a portion of their shares on the stock market as a way to spread the burden. “Listing on the market” was lucrative for those who could get a share allocation; hence the reference to the rice.
Not every entity was allowed to list; there was a quota. Once an enterprise had been approved as part of the quota, the state government in the form of treasury officials and bank authorities first turned into debt what had been “government allocations” to the enterprise. The debt was then converted into shares. Finally, through the issuance of shares on the stock market, the government did everything in its power to sell the shares to shareholders.
This had two positive results. On the one hand, it gave the state-owned enterprises that were gasping for their last breath one more chance to start breathing again. On the other hand, it also resolved the so-called tiger in the cage problem. This referred to the rapid accumulation of Chinese savings— instead of being put to productive use, they were being hoarded away.
As the most dangerous period approached in terms of the survival of state-owned enterprises, the government substantially reversed its thought
Shenzhen grows taller. June 5, 1995, the 383.95-meter Shenzhen Diwang Building is almost completed.
From 1996 onward, joining the Fortune 500 became the dream of many Chinese entrepreneurs.
process. The “blood transfusion” to the state-owned enterprises from the stock market gave the former temporary support, but at the same time, it turned the newly opened capital markets into a gamblers’ paradise. In order to deal with the hundreds of thousands of state-owned enterprises, the central government finally adopted a strategy of “keep hold of the big ones and let the little ones go.” “Let the little ones go” meant implementing the experience of the town called Zhucheng in Shandong. “Keep hold of the big ones” meant vigorous support for those stateowned enterprises that were charging into the market. The aim was to turn them into Fortune 500 companies as quickly as possible.
In Chinese, the term “Fortune 500” is not actually used; a direct translation