However, experts still caution that restructuring won't work in the long run as a method for fostering a healthy stock market mechanism if in the future the move is still, as it is now, government-directed.

The government should not function as owner of some of the enterprises' assets, an identity that requires it to play an essential role in the enterprises' operation; instead, it should act as a neutral party whose role is to create a market-oriented environment for the companies, experts said.

Shanghai Narcissus Electric Appliance Co Ltd announced that 2000 was its fourth consecutive year in the red In its annual report on April 18, it applied for a six-month grace period at the Shanghai Stock Exchange (SSE). The Exchange denied the petition, making Narcissus the first delisted company in China.

The move was hailed by many as a signal that the Chinese mainland stock market has adopted stricter supervision and a performance-based delisting procedure.

"By selecting Narcissus as the first delisted company, the market can be warned and better regulated, and the negative effect on investors will be minimized," said Yao Qingtao, one analyst with www.eefoo.com.

Also, the delisting of Narcissus will spur the restructuring of Chinese State-owned enterprises (SOEs) with shaky stock market performance.

Many SOEs in China have been widely rebuked for low efficiency, backward management and lack of awareness of the competition.

Among more than 1100 companies listed on the Chinese stock market, 15, including six which are Shanghai-based, are billed as particular transferred (PT) companies, meaning those which record three consecutive years of losses.

Narcissus' delisting has tolled what should have been the deathknell for some of these, including the notorious PT SAIC Multiple Trading, PT Wangdian and PT Shuanglu, whose huge debts make experts believe their restructuring is almost a "Mission: Impossible".

Yet miracles seem to be taking place on the stock market.

PT Shuanglu, whose debts have totalled more than 600 million yuan (US$72 million), announced last week it will implement an overall asset swap with its major shareholder, Shanghai White Cat (Group) Ltd.

The reorganized company will be named Shanghai White Cat Co Ltd, PT White Cat for short.

PT Steel Pipe said earlier that it will also complete an asset swap with Shanghai Baosteel Information Industry Co Ltd to turn around its loss-making operation.

PT Forever claimed that it will rely on the government-designated companies to realize restructuring.

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