China is considering setting up a supervision system for
overseas investments by central state-owned enterprises (SOEs),
sources with the State-owned Assets Supervision and Administration
Commission revealed on Thursday.
The aim is to regulate central SOEs' offshore investment
activities and reduce their exposure to risk, the sources said, but
did not provide details of the possible supervision system.
In recent years, China has opened wider to the outside world and
encouraged more and more domestic businesses to "go abroad".
Last year, Chinese enterprises made direct offshore investments
of more than US$16 billion, up 32 percent on the previous year.
By the end of 2006, Chinese enterprises had launched more than
10,000 offshore operations, involving a total investment of US$73
billion. Central SOEs contributed significantly to the investment
growth, the sources said.
But problems have cropped up in the "going abroad" process, the
sources added, citing the scandal of China Aviation Oil Ltd.
In 2004 Chen Jiulin, former vice general manager of the central
SOE and former president of the company's Singapore operations, was
sacked from his post for generating a loss of US$550 million from
futures speculations.
People responsible for the scandal were penalized in early
February this year. Alarmed by the scandal, the commission felt it
was necessary to take stricter measures to supervise overseas
activities by central SOEs, the sources said.
(Xinhua News Agency March 9, 2007)