terms, said Zhang Xinfa, a macroeconomy analyst at Galaxy Securities Co. Ltd., in an article in China Securities Journal.

Oil Giant's Headache

China National Petroleum Corp. (CNPC), once the most profitable company in Asia, said it plans to lay off 5 percent of its staff in the next three years, due to high employee costs and sliding company profit.

Although CNPC initially said that about 80,000 employees of its estimated 1.7 million workers could face possible layoffs over the next three years, it later denied the number. The company did not provide further details about the job cuts.

CNPC's performance in the first six months disappointed many investors. The company had profit of 56.4 billion yuan ($8.25 billion), down 39 percent from the same period last year. Jiang Jiemin, CNPC's General Manager, said at a company meeting for employees that heavy losses in its oil refinery business and an increase in the special oil gain tax were to blame.

CNPC also vowed to cut costs in other areas such as travel expenses and other operational costs.

In the meantime, it said it would issue 60 billion yuan ($8.8 billion) worth of company bonds to provide more funds for production and cash flow.

Aiding SMEs

The Chinese Government remained dedicated to assisting small and medium-sized enterprises (SMEs) that are experiencing problems with their economic restructuring.

Xinhua News Agency reported that the Ministry of Finance would allocate 3.5 billion yuan ($512 million) from the 2008 central budget to support SMEs. The amount of money is 25 percent more than that of last year.

SMEs have become an important force in fueling economic growth and providing jobs. But many are having financial difficulties as a result of tightening domestic policies and declining export orders that are falling amid the global economic slowdown.