Thu, Jan 25, 2018 - Page 10 News List

Beijing orders big state-run firms to earn profits: sources

Bloomberg

China has taken the unusual step of ordering its biggest state-owned enterprises (SOEs) to earn profits this year as the government increases its scrutiny of bloated businesses, according to people familiar with the matter.

The state-owned Assets Supervision and Administration Commission on Monday last week told senior executives about the edict, which would apply to all of the nation’s 98 central SOEs, said the people, who asked not to be named because they were not authorized to discuss the matter with the media.

It was the first time in recent memory that the Chinese government made it mandatory for SOEs to make profits, they said.

It was not immediately clear what the repercussions would be for noncompliance.

Though individual breakdowns are not available, combined profits last year at central Chinese SOEs, some of which rank among the world’s biggest companies, rose 15 percent — their fastest pace in five years — to a combined 1.4 trillion yuan, (US$219 billion), according to the commission, which oversees the nation’s SOEs.

The move represents the latest sign that the Chinese Communist Party is tightening its grip over the nation’s US$24 trillion SOE sector as Chinese President Xi Jinping (習近平) calls for them to become “stronger, better and larger” in the next five years.

Beijing has been seeking to overhaul SOEs for years to bolster the economy as state enterprises command about 40 percent of the nation’s industrial assets and create nearly 20 percent of urban employment.

The commission did not immediately reply to a faxed query seeking comment.

According to the regulator’s Web site, it urged executives during last week’s gathering to uphold their allegiances to the party and transform their companies into globally competitive giants.

The rule on making profits was not mentioned.

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