It means that millions of people working for various institutions will lose their ranks of being "cadres" when the new reform is set into place this year, a senior official said on Sunday at a press conference.

Xu Zhenhuan, director of the Department of Administration of Professional and Technical Staff under the Ministry of Personnel, said that long-awaited regulations, which are a key part of China's personnel reform under a growing market economy, have been officially approved by the central government.

It is not all bad news for displaced cadres, Xu said.

They may fare better than government officials with higher salaries or perks according to their competence, talent or achievement, Xu added.

This week a circular urging implementation of the reform down to grassroots levels throughout China will be jointly issued by the ministry and the Organization Department of the Party's Central Committee, the core agency responsible for the appointment of senior officials, Xu said.

"This reform will separate the administration of personnel of institutions from official agencies, and vitalize the institutions by giving administrators more power in making use of their own personnel," Vice-Minister of Personnel Xu Songtao said in a recent report.

China has more than 1.3 million State-owned or State-run institutions with over 29 million employees.

Fifty-eight per cent of those, 17 million, are professional workers. More than 5.1 million are managers and the rest are labourers.

Under the old system, State-run institutions had ranks equivalent to ranks of government officials.

Heads of institutions were appointed by the government.

According to Xu, the reform will first be carried out in institutions of scientific and technological research, higher education and medical services.

"From now on, the government will gradually cancel administrative ranks in institutions and will not ensure treatment of their personnel according to such ranks as in the past," Xu said.

Institutions will have the final say in employment practices. The reform will enable institutions to reward top performers with higher wages, he said.

In this way, Xu said he hopes people will be motivated to become more productive.

To ensure social stability, institutions should find other positions for those affected until an efficient social security system can be fully established in China, according to Xu.

(China Daily)