Profits of China's state-owned enterprises (SOEs) grew 25
percent year-on-year to 904.7 billion yuan (US$112 billion) in
2005, a record high, the Ministry of Finance said on Thursday.
Zhu Zhigang, Vice Minister of Finance, said sales revenue of
SOEs totaled 11.534 trillion yuan (US$1,424 billion) last year, up
19.2 percent from the previous year.
Zhu attributed the rapid growth to sound macroeconomic
practices, improved corporate governance, restructuring, and higher
commodity and petrochemical prices.
China's macroeconomic policy over the last year was designed to
make its rapid economic growth sustainable by cooling investment in
sectors such as iron and steel, and cement, while increasing
investment in agriculture, energy, transportation and public
services, also considered the "weak links" for China.
Since 1999, billions of yuan in government funding has been used
to restructure China's state-owned sector in order to contain
losses and improve profitability. Unprofitable firms have been shut
down while others have cut surplus employees and phased out
non-essential functions.
Between 1999 and 2004, 80,000 SOEs were shut down, or 37 percent
of the total. Employee numbers dropped 49 percent to 38.25 million,
Zhu said.
Dramatic price increases for commodities and petrochemical goods
further pushed profits up. Profits for firms involved in oil, coal
and non-ferrous metals jumped 52 percent, 74 percent and 60 percent
respectively, Zhu said.
Driven by high demand and rising prices, the energy,
petrochemical and raw material sectors contributed 84 percent of
the total growth in profits, Zhu added.
Zhu also said that profits of SOEs under direct control of the
central government totaled 641.3 billion yuan in 2005, accounting
for about 70 percent of all profit earned by SOEs.
(Xinhua News Agency February 24, 2006)