Chinese top legislature began to deliberate its first state assets law, designed to protect the state-owned assets from being illegally seized and maintain the country's basic economic system.

The draft state-owned assets law was submitted to the Standing Committee of the National People's Congress (NPC) for first deliberation on Sunday.

The draft, with nine chapters and 76 provisions, stipulates the central government should set up a budget system for the operation of state-owned assets, managing the revenue and payout.

"The profit made by SOEs which should be contributed to the state assets, the income of state assets transfer, and income which belongs to the state-owned assets during the calculating and check of SOEs should be written into the budget," it said.

The draft details procedures of SOE restructuring, stipulating the assets of the SOEs should be accurately calculated, audited and assessed before restructuring or ownership transfer.

"The state assets should be transferred at reasonable prices," it said.

In case of merger, restructuring and application for bankruptcy of SOEs, consultations should be held with relevant trade unions and opinions should be solicited from the employees through meetings or other means, according to the draft.

It prohibits the management of the SOEs from embezzling the state-owned assets.

People involved will be punished according to relevant laws and regulations if they are found seizing, withholding, or embezzling the state assets. They also will face punishment if found to have transferred the state assets at unreasonable low prices, caused economic loss to the state assets by dereliction of duty or committed other misconducts.

China has been implementing reforms in its state enterprises over the past two decades, restructuring the enterprises with sole state ownership into joint-venture companies, or transferring SOEs into non-SOEs.

China's Constitution stipulates that public ownership should be the leading force of the socialist market economy, of which the private economy is a major component.

According to statistics provided by China's State-owned Assets Supervision and Administration Commission (SASAC), China had nearly 120,000 state-owned enterprises (SOE), including enterprises or companies with sole state ownership, and joint-venture companies with the state as biggest shareholders, which possessed assets worth more than 9,700 billion yuan (about US$1,330 billion) in 2006.

The 31st session of the 10th NPC Standing Committee is being held from Dec. 23 to 29.

(Xinhua News Agency December 23, 2007)