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)