A Proposition on How to Handle Enterprises Long in the Red

The State Council has already decided on the policy of "using tax to supersede profit [to be turned in to the state], independent accounting, and assuming sole responsibility for profits or losses" as the basic orientation in restructuring the economic system of state-run enterprises, a move that tallies with the objective law of socialist commodity production. Earnest implementation of the principle of allowing an enterprise to "assume sole responsibility for its profits or losses" will inevitably lead us to the question of what we should do if a few enterprises have long been operating at a loss. The solution, for the moment, is to have these enterprises closed down, suspended, or switched to other lines of production. It still represents an administrative expedience that allows the higher authorities to bail them out. This practice exempts business operators from any responsibility and brings virtually no pressure to bear on the cadres and employees of enterprises in the red, so that they can be prodded to improve management and operation. The method is even more unfeasible now that the policy of "assuming sole responsibility for profits or losses" is being implemented.