The country’s State-owned enterprises (SOEs) will probably begin to pay
dividends to the government beginning next year, the State assets watchdog said
in comments published Friday.
Li Rongrong, head of the State-Owned Assets Supervision and
Administration Commission (SASAC), was cited by the Caijing magazine as saying that
the payouts will be applied towards public works projects and the development of
some industries.
“Chinese SOEs so far have not paid any dividends because they have had
their own difficulties in the past, meaning we had to let them keep the profits
for their own development,” the magazine's website cited Li as saying at a
conference in Singapore.
“From the beginning of next year, dividends should be required.”
The World Bank has urged China to require State firms to pay dividends to
reduce their abundant investment capital, which is feeding overcapacity in some
sectors that authorities fear could lead to a fresh crop of bad loans.
The finance ministry and SASAC have reached a basic consensus on the issue,
but still had to work out details including the proportion of profits to be paid
out and how they would be used, Li said.
The agency has already issued a circular on the proposal and is seeking input
from other government departments, the magazine said.
The magazine added that in addition to traditional State firms, those
companies and financial institutions that have already received capital
injections from Central Huijin, the investment arm of the Central Government,
will also be required to pay the dividends.
The government’s recapitalizations of Bank of China, China Construction Bank,
and Industrial and Commercial Bank of China were all carried out through Central
Huijin.
Li added that China welcomes foreign participation in the reform of its State
firms, and that his agency was “carefully” working out plans for allowing State
firms to offer incentives to their management as they become more market
orientated.
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