BEIJING, Aug. 20 -- Ninety-six per cent - 172 of 179 State-owned enterprises (SOEs) - passed their performance evaluations for 2004, the State-owned Assets Supervision and Administration Commission (SASAC) announced on Friday.

    Three firms including China Southern Airlines were downgraded, and four companies that the commission would not identify failed.

    This is the first time the SASAC, the industry watchdog, has publicized SOEs' performance appraisals.

    "It aims to preserve and appreciate State assets and avoid asset losses during the restructuring of the SOEs," said Li Rongrong, SASAC minister.

    China National Offshore Oil Corp (CNOOC), Shenhua Group and China Shipping Group led the list of 25 SOEs that were graded A for their outstanding performance.

    Grades of B (good) and C (fair) were given to 141 companies. Nine were in group D because they failed to meet some indices, and four received E grades because of faked financial reports and poor management.

    China Southern Airlines, plagued by an incident involving financial ethics, dropped from B to C. Police arrested its vice-president, Peng Anfa, on Tuesday on charges of embezzling and accepting bribes.

    Because of big accidents in production, China Coal Group was downgraded from A to B, and Sinohydro Corp from B to C.

    "The evaluation system will make management personnel more conscious of their responsibility and encourage them to perform efficiently," Li Rongrong said.

    SASAC designed a comprehensive performance appraisal scheme, combing the annual performance evaluations during presidents' three-year tenures.

    Their performance was assessed and graded based on company corporate profits, return on net assets and a number of other factors. The salaries and bonuses of enterprise leaders are directly linked to corporate profits.

    Ma Zhongchao, Party secretary of China Light Industry Economic and Technological Co-operation Co, thought highly of this performance evaluation scheme.

    "With such a scheme and quantified indices, we have a clear target, and we know where we should place more effort," he said.

    Dong Peijiang, vice-president of the China Energy Conservation Investment Corporation, agreed.

    "The scheme does make a difference," he said. "We now know clearly we will be kicked out if we are bad performers and we will be rewarded if we perform well."

    Li Shousheng, director of Performance Evaluation Bureau of SASAC, said the commission will strengthen the evaluation system to put it in line with international standard.

    (Source: China Daily)