BOAO, Haianan province - China's State assets watchdog has warned State-owned enterprises (SOEs) not to engage in stock market or financial derivatives speculation and urged the enterprise to perfect the risk management mechanism to deal with economic uncertainties this year.

"SOEs should be fully committed to their core business and not get involved in the stock market or financial derivatives speculation," said Huang Shuhe, a vice minister at the State-Owned Assets Supervision and Administration Commission (SASAC) earlier this month at the Boao Forum for Asia 2011 on Hainan Island.

He said China's economic outlook has a lot of uncertainties this year and SASAC will adopt three major approaches to help SOE avoid risks. These include limiting their business activities, assessing their core business performance, and establishing a system to track who is to be held responsible if something goes wrong.