Heralding social, financial change, China aims blow at iron rice bowl

Sat Dec 17, 2016 8:15pm EST
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By David Stanway

PINGDINGSHAN, China (Reuters) - China has ordered state firms to smash the decades-old system of providing cradle-to-grave welfare support, known as the country's "iron rice bowl".

But the order, part of a plan to reduce financial pressure on bloated and heavily indebted state-owned enterprises (SOEs), is likely to be easier said than done as cities navigate the social and financial wrenches the changes will cause.

At the heart of soot-covered Pingdingshan in central China is the Pingmei Shenma Group, a state coal conglomerate that dominates the economy, society and air of the heavily polluted city in Henan province.

Apart from coal, it has chemicals and construction businesses. But it also has a startling number of other responsibilities.

It operates 41 hospitals and 18 schools and provides pensions, subsidized housing for workers, water, heating and power. It even runs a plush retirement home, complete with golf course, for its senior managers.

The fate of these facilities, landmarks for the city's residents, is now unclear. If they are not closed down, much of the infrastructure will need to be renovated, which State Council researchers estimate will cost more than 1 trillion yuan ($115 billion) nationwide.

Some of Pingdingshan's hospitals already had fewer miners to treat after capacity cuts in coal production.

"We can only try to provide better services," a doctor, who only wanted to be identified by his surname Li, said at a small outpatient clinic near Pingmei Shenma's defunct Number Seven coal mine.   Continued...

Employees work inside a factory of Pingmei Shenma Group in Baofeng County, Henan province, China, April 8, 2015. Picture taken April 8, 2015. China Daily/via REUTERS