Current financial problems and reforms in China
INTRODUCTION Up until the end of 1992, there were more than 10,000 large and medium state-owned enterprises in China. This number accounts for only 2.5 per cent of the total enterprises, but their general product (GP) accounts for 46 per cent of the whole. Moreover, they contributed 60 per cent of the total profit and tax that the Chinese government received. Because large and medium state enterprises play such an important role in the Chinese economy, they usually are more heavily subject to regulatory control and economic planning. Financial regulation, such as a specific fund system, is implemented and strictly enforced in these enterprises. Unfortunately, at least one-third of them performed very poorly and inefficiently. According to the Chinese Industrial and Commercial Bank, more than 500 key state enterprises ran into increasingly serious deficits in 1990. Their total losses were 11.81 billion yuan ($US1 = 5.23 yuan in 1990).