Center

Capital budget for State-owned enterprises sought in 2007

By Xin Zhiming (China Daily)
Updated: 2007-01-26 08:51

SASAC has been experimenting with the budgetary system in certain localities in recent years. Local bodies have been organized to manage investment using capital pooled from State enterprises.

Li said such investment had "improved the efficiency of (State) capital and strengthened the power of those enterprises."

The practise will become part of the national State capital budgetary regime, which is under discussion.

Since the early 1990s, when they performed poorly, most State enterprises have been allowed to retain their profits for re-investment to help them develop faster. But as the coffers of State enterprises have filled, the public has grown increasingly dissatisfied, demanding that they share their profits with the State.

The MOF reportedly drafted a rule in June for the establishment of a national budgetary system for State assets. If it is approved, the 120,000-plus State enterprises nationwide, including the 159 central firms, will start paying dividends to the State.

The MOF will be responsible for making the national budget while the SASAC will have the power to decide on the budgets of the central enterprises, according to media reports.

Li also said SASAC would press on with the share-holding reform of State enterprises and improve their corporate governance.

"The listing of eligible large- and medium-sized State enterprises overseas will be actively pushed ... to make them stronger."

China's State enterprises earned 965 billion yuan ($123.7 billion) in profit last year.

The 159 central State enterprises earned profits of 754.7 billion yuan ($96.8 billion) during the same period, up 18 percent over 2005.

The amount accounted for 78 percent of the overall profits of all State enterprises.

(China Daily 01/26/2007 page3)