Sharing matters for China's SOEs
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Scandals and corruption in SOEs have also angered the public and aggravated doubts about them. The lack of supervision over executives has been singled out as the major reason for this problem. Many senior managers in SOEs still hold official titles, a fundamental difference from bosses in private companies.
In addition, the average salary of SOEs' employees is at least five times that of staff in non-state fields. Earnings for top officials are also very high.
In 1993, the Chinese government established regulations covering SOE dividend payments, dividing firms into three groups according to industrial sectors. Enterprises in the tobacco, petroleum, telecommunications, coal development and electricity sectors were required to submit 10 percent of their dividends to the Ministry of Finance; SOEs in all other sectors than the military were required to submit dividends of 5 percent.
In the middle of last year, China's Ministry of Finance made a plan to increase the amount of dividends it receives from SOEs. The proposal was submitted to the State Council and is expected to be officially approved this year.
On December 28, 2010, the State Council, in response to public concern, ordered most central-level SOEs to pay larger amounts of dividends to the authorities. Starting from 2011, the most profitable SOEs, including those in the oil and gas, tobacco, telecommunications and energy sectors, will have to pay 15 percent of their post-tax profits into the central coffers, up from 10 percent. SOEs in trade, construction, transport, mining and steel will be obliged to pay 10 percent, up from 5 percent. This can be seen as an promising sign that the government is beginning to pay attention to this issue.
The SOEs, on the whole, have not played a positive role in improving social harmony, particularly when it comes to narrowing the wealth gap, and they are not seen as having made a substantial contribution to the well-being of ordinary Chinese. Even the official media are calling upon SOEs to share their wealth with the public at large. Further adjustments by the government are expected, focusing on the earnings of SOE officials and controls on dividends.
Huang Shuo is a Beijing-based freelance writer. He can be reached at larryhuangshuo@gmail.com.
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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