China: Should Start Collecting State Cos' Divs Next Year-2-
News Archive - Industry Headline - September news
(Dow Jones Newswires, Sep 15, 2006)Strong investment growth, alongside a widening trade surplus, have been the key drivers of China's blazing economy, which expanded 11.3% in the second quarter - its fastest quarterly growth rate in a decade. China's fixed-asset investment grew 29.1% on year between January and August this year.
SASAC has taken a series of measures to slow investment by SOEs as a part of the government's battle against overheating. In August, SASAC capped SOEs' investment in areas unrelated to their core business at 10% of their total investments.
"SOEs haven't paid dividends because before SOEs faced (financial) difficulties," said Li. "So we let them keep their returns to develop themselves."
Li said the total number of state-owned enterprises and state-held enterprises fell from 159,000 to 127,000 between 2002 and 2005.
The World Bank argues that China's SOEs have become more profitable in recent years as China shuts loss-making enterprises and strengthens its large SOEs.
Because the state hasn't required them to pay dividends, SOEs reinvest their profits, sometimes inefficiently, to expand their business scope and stature.
SASAC oversees 166 central government-controlled enterprises, including China's largest steelmaker, Shanghai Baosteel Group Corp., and Asia's largest oil refiner, China Petroleum & Chemical Corp. (SNP) or Sinopec. The SOEs under its control had assets totaling CNY10.6 trillion at the end of last year.
Li said those 166 enterprises made profits of CNY627.6 billion last year and paid CNY541.28 billion in taxes.
SASAC has launched a trial program to install corporate boards in the country's largest SOEs, creating 16 corporate boards thus far, Li said.
SASAC will also push forward with plans to create an incentive system for SOE managers that encourage them boost efficiency and profitability and reduce corruption, Li said. Low pay and poor incentive structures in SOEs have led to corruption among some SOEs and the government officials that regulate them.
"My mandate is to separate politics from the enterprises," said Li. "If we open the front door, we must also close the back door."
He said SASAC would work to devolve more control to SOEs' boards of directors and restrict SASAC's role to that of a shareholder that only appoints the board of directors.
-By Rick Carew, Dow Jones Newswires; 8610 6588-5848;
-Edited by Mary de Wet

Source:Easybourse

tag: