The state asset management body said yesterday it would try to
establish a capital budgetary system for enterprises directly
controlled by the government this year.
"We have had numerous negotiations with the Ministry of Finance
(MOF) and have been actively preparing for (the system)," said Li
Rongrong, director of the State-owned Assets Supervision and
Administration Commission (SASAC).
He made the comments during yesterday's national work conference
on state-owned assets management. The conference closes today.
The State Council has already given its approval to SASAC to set
up a new company to manage state-owned assets, according to a
report by the China Securities Journal.
The new budgetary regime for state capital is expected to
require state-owned enterprises to hand over some of their
profits.
The commission may use some of that money to help replenish the
capital of under-funded state enterprises or finance the exit of
state companies from competitive sectors, Shao Ning, SASAC's deputy
director, said in December.
The funds can also be used for investment to appreciate the
value of state assets.
The move is in line with the national strategy since 1997, when
the Party held its 15th National Congress and decided to adjust the
layout of its state enterprises.
SASAC has been experimenting with the budgetary system in
certain localities in recent years. Local bodies have been
organized to manage investment using capital pooled from state
enterprises.
Li said such investment had "improved the efficiency of (state)
capital and strengthened the power of those enterprises."
The practise will become part of the national state capital
budgetary regime, which is under discussion.
Since the early 1990s, when they performed poorly, most state
enterprises have been allowed to retain their profits for
re-investment to help them develop faster. But as the coffers of
state enterprises have filled, the public has grown increasingly
dissatisfied, demanding that they share their profits with the
state.
The MOF reportedly drafted a rule in June for the establishment
of a national budgetary system for state assets. If it is approved,
the 120,000-plus state enterprises nationwide, including the 159
central firms, will start paying dividends to the state.
The MOF will be responsible for making the national budget while
the SASAC will have the power to decide on the budgets of the
central enterprises, according to media reports.
Li also said SASAC would press on with the share-holding reform
of state enterprises and improve their corporate governance.
"The listing of eligible large- and medium-sized state
enterprises overseas will be actively pushed ... to make them
stronger."
China's state enterprises earned 965 billion yuan (US$123.7
billion) in profit last year.
The 159 central state enterprises earned profits of 754.7
billion yuan (US$96.8 billion) during the same period, up 18
percent over 2005.
The amount accounted for 78 percent of the overall profits of
all State enterprises.
(China Daily January 26, 2007)