State-owned banks and enterprises should give dividends to state
shareholders, suggested Zhou Xiaochuan, president of the People's Bank of China,
in his speech delivered at the China Entrepreneur Summit 2005 in
Beijing on Monday.
Zhou added that because the reform of state-owned enterprises
(SOEs) is covered less in the media these days, there's a mistaken
belief that reform is complete. He said there is actually still
much reform to be implemented.
Zhou said that the next phase of reform would be to have SOEs
pay dividends to state shareholders. This would complement other
reforms in the areas of managing legal entities, clarifying
property ownership, and improving supervision mechanisms.
Further, Central SAFE Investments Ltd, the holding company of
the country's three largest state-owned commercial banks --
Industrial and Commercial Bank of China (ICBC), China
Construction Bank (CCB) and
Bank of China (BOC)
-- should have the banks pay the dividends, Zhou pointed out.
According to an official from BOC, a new index -- Profit Return
Rate of Stocks -- has been set to evaluate the profit to be
returned to shareholders. According to international standards,
this rate should be around 11 percent. Last year, BOC handed in
more than 10 billion yuan (about US$1,239 million) in profits to
Central SAFE Investments Ltd. CCB is also confident that its Profit
Return Rate of Stocks will also match international standards this
year.
Zhou pointed out that the reform of SOEs had made progress in
the areas of taxation and accounting, laying the groundwork for the
payment of dividends.
According to Tuesday's National Business Daily, a report
from the International Monetary Fund (IMF) supports dividends
payment because this would further improve the market consciousness
of SOEs and increase their ability to invest in the market.
Furthermore, dividends paid by SOEs will help the government
establish and maintain social security and pension funds, thereby
stimulating China's domestic consumption.
(China.org.cn by Xu Lin, December 15, 2005)
