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China to End Bailout of Bankrupt State Firms

China will end the practice of bailing out bankrupt State-owned enterprises (SOEs) within four years, and force them to sink or swim according to market rules, State media quoted an official as saying.

"In four years, SOEs will follow market rules and apply for bankruptcy according to the same laws and regulations as foreign and private companies," the Xinhua News Agency report said, quoting Shao Ning, vice-minister of the agency in charge of State assets.

The plan by the State-owned Assets Supervision and Administration Commission to force State companies to survive on their own merits was approved by China's cabinet, the State Council, in February.

The government has given less money to poorly performing State-owned companies over the years, but continues to inject funds into other State firms that it believes can restructure and become profitable.

To help badly performing SOEs retreat from the market smoothly, the Chinese Government has adopted a series of bankruptcy policies on employees' rights, asset management and bad loans.

So far, Beijing and Shanghai as well as Jiangsu, Zhejiang and Fujian provinces have halted government bailouts.