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Government departments to shed publishing houses in shake up - Furnace Gas Valve by e55he swrzsnb

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Government departments to shed publishing houses in shake up - Furnace Gas Valve by
Article Posted: 05/31/2013
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Government departments to shed publishing houses in shake up - Furnace Gas Valve

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Translated by Liu Peng News, page 4, Issue 423 Original article: [ Chinese ] Eighty publishing houses currently affiliated with variousministries and commissions of the Chinese central government areslated to be corporatized by the end of 2009, according to China'snational media and publishing regulating body. The move is part of a larger plan by the General Administration ofPress and Publication (GAPP) to shed 148 of these Beijing-basedpublishing houses over the next two years. It's also part of a broader restructuring of cultural industriesthat is taking place in China, and it's only because of thepolitical sensitivity of meddling with thesecentral-government-affiliated publishers, that they have been ableto avoid the restructuring that has already taken place in theregional and university publishing industries. The publishers approach the reform with different views, some,especially the more competitive and profitable presses, lookforward to it, most don't care, a small minority are?opposedto?reform.

The total assets locked-up in these official publishing housesamounts to approximately 100 billion yuan. However, it remainsunclear who will be in control of these assets after the reformsare completed. Resistance to the Shake Up At present, the Publicity Department of the Communist Party ofChina Central Committee and GAPP are organizing training programsfor the heads of the Beijing-based publishing houses involved inthe plan. During the reform, six or seven giant publishing groups devoted tobroad areas such as education, science and technology, economicsand health care will be established from the publishers.

The Economic Observer learned that two publishing houses attachedto the Ministry of Human Resources and Social Security - ChinaLabor and Social Security Publishing House and China PersonnelPublishing House - and the China Financial Publishing House, whichis subordinate to the People's Bank of China, were included in thefirst batch of publishing house that will undergo restructuring. The plan is, that in keeping with the principles of reform,publishing houses which are currently subordinate to governmentdepartments and which often serve as convenient repositories forsemi-legal funds, would, through restructuring, mergers and othermeasures, gradually evolve into competitive participants in themarket economy. The EO learned that some ministries and commissions were in thehabit of transferring any unspent funds that they had received totheir subordinate publishing houses under the premise of publishingcosts. Instead, the money became a slush fund of sorts for theministries and commissions and they saved up huge amounts that wereused to fund the social spending obligations of the unit.

"Some publishing houses have become "small gold storage ponds" tothe ministry or commission above them, and are used to fundhandouts and bonuses to the ministry's workers," said Liu Binjie,director of GAPP in an interview with state media CCTV. He candidly went on to admit that "some ministerial chiefs asked meto first find a solution to this problem before cutting off thesource of their company's bonuses." Another barrier to reforming the system according to Zhu Shanbo,president of Tacter Consulting Company and long term observer ofreform in the publishing industry, is that "these publishing houseshave a strict system of administrative ranking. In order to promotesome cadres, the ministries would often transfer them to a positionof higher government ranking in these publishing houses." Hiscomments point to concerns among some ministries and commissionsthat the reforms would remove the additional space for promotionthey currently have in?terms of being able to offer?staff positionsin their subordinate publishing houses. He went on to add that even if the reform would result inpublishing houses being more vigorous and competitive, someofficials, especially those occupying key positions, were notwilling to support the changes. Will the Reforms Go All the Way? Given these barriers to reform, many commentators are concernedthat the restructuring will not be completed.

Already, according to an EO source, the central government has beenforced to compromise on the issue of institutional separation ofthe publishing houses from their controlling ministry orcommission. Despite the State Council requiring ministries and commissions toseparate their main administrative functions, such as finance andpersonnel, from the publishing houses, some publishers are beingallowed to "temporarily not separate." According to the same source, "the temporary relaxation of theseparation rules is being adopted to quicken the pace of reform,otherwise it would be impossible to move forward." Other Problems Faced by the Reform Among the problems associated with the restructuring, the problemin most urgent need of a solution is, who will be responsible forthese state-owned publishing conglomerates and who will regulatetheir state-owned assets. Analysts believed that given the small scale of the assets involvedand also the high pressure on maintaining and increasing theasset-value of these publishing houses, it was unlikely that theState-owned Assets Supervision and Administration Commission(SASAC), the country's state-owned assets watchdog, would takeover. The EO learned that policymakers were considering a proposal thatwould allow the Central Propaganda Department to take charge of thepublishing groups on behalf of SASAC.

Wang Bo, president of China Logistics Publishing House, held thatlarge publishing groups, state-owned companies and other marketentities could also play a part in the restructuring process. "Private capital is interested in publishing house reform," saidZhu Shanbo. He believed that if private capital was allowed toenter into the publishing sector, the industry would boom. To help ease the introduction of the reforms, various centralgovernment departments will enact favorable policy measures. Forinstance, corporatized publishing houses will be exempt from payingcorporate income tax, housing tax, value-added tax and tax onimports and exports.

But these measures only cover the minimal associated costs ofreform. It still remains unclear who will be burdened with theother more substantial costs of reform, including pension funds andother human resources costs associated with civil servants becomingregular employees. The EO learned the cost of corporatizing publishing houses islikely to be quite expensive, as can be seen in the experience ofrestructuring the regional publishing houses, when costs sometimesclimbed into the hundreds of millions of yuan.

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