Home / Business / News Tools: Save | Print | E-mail | Most Read | Comment
Government to get 10% of SOE profits
Adjust font size:

State energy, telecommunications and tobacco companies will be paying the highest portion of their profit as dividend to the central government from next year, reflecting their monopoly status.

 

Twelve energy firms, including China National Petroleum Corp and State Grid Corp of China, five telecom operators led by China Mobile Communications Corp, and the China National Tobacco Corp are in the first category which has to pay 10 percent of their net profit, the State-owned Assets Supervision and Administration Commission said yesterday.

 

China plans to start collecting dividends from the 150-plus state firms under the central government's direct control starting next year, with the money used to finance the nation's strategic planning and for social security purposes, the State Council, or China's Cabinet, has said.

 

Another 99 large state-owned enterprises directly controlled by the central government, including metal producers and air carriers, which come into the second category, will pay five percent of their profit, according to the SASAC.

 

The remaining 34 major state-owned companies will either start paying the dividend in three years' time or not have to pay it at all.

 

China once collected such dividends from SOEs before halting the move in 1994 as part of efforts to help financially troubled firms use profits for their own growth.

 

But the government revised its thinking last year as state firms posted strong earnings amid the nation's rapid economic expansion.

 

PetroChina Co, for example, the most profitable listed company in Asia and a unit of CNPC, saw net income rise to 81.83 billion yuan (US$11.1 billion) in the first half of this year, on the back of its central role in supplying energy to the world's fastest-growing major economy.

 

"In the long run, such state dividend collection would surely add pressure to earnings in listed state firms such as PetroChina," said Gu Jingdong, an analyst at Tebon Securities. "It's not strange that energy and telecom firms are subject to higher dividend as competition is less in their sectors."

 

Experts have also suggested that dividends should be collected to divert excess capital from investment. The World Bank has argued that China's state-owned companies, with no need for dividend payouts, usually reinvest their profit inefficiently.

 

The SASAC said yesterday that the SOEs will pay dividends on their 2006 earnings at half the required ratio in a pilot stage.

 

The SOEs under direct control of the central government had a combined profit of 754.7 billion yuan (US$102.4 billion) in 2006, up 18.2 percent from a year earlier.

 

(Shanghai Daily December 18, 2007)

Tools: Save | Print | E-mail | Most Read
Comment
Pet Name
Anonymous
China Archives
Related >>
- Profits of SOEs Hitting Records
- SOEs Rake in 753 Bln Yuan in First Half Year Profits
- Gov't to collect 17 bln yuan from central SOEs
Most Viewed >>

Nov. 1-2 Tianjin World Shipping (China) Summit
Nov. 7-9 Guangzhou Recycling Metals International Forum
Nov. 27-28 Beijing China-EU Summit
Dec. 12-13 Beijing China-US Strategic Economic Dialogue

- Output of Major Industrial Products
- Investment by Various Sectors
- Foreign Direct Investment by Country or Region
- National Price Index
- Value of Major Commodity Import
- Money Supply
- Exchange Rate and Foreign Exchange Reserve
- What does the China-Pakistan Free Trade Agreement cover?
- How to Set up a Foreign Capital Enterprise in China?
- How Does the VAT Works in China?
- How Much RMB or Foreign Currency Can Be Physically Carried Out of or Into China?
- What Is the Electrical Fitting in China?