China will tighten supervision of state companies with operations overseas, part of an effort to prevent abuses and control risks following the near bankruptcy of the country's main jet-fuel supplier due to speculative trading, state media reported on Wednesday.
Executives of companies that violate regulations and endanger their companies' assets will receive "strict punishment," the state-run newspaper China Daily cited Economic and Trade Commissioner Li Rongrong (李榮融) as saying.
China began tightening controls over major state companies after China Aviation Oil (Singapore) Corp (
The company and its former chief executive officer, Chen Jiulin (
"The central government has urged all central state-owned enterprises to learn lessons from this case and take positive and effective measures to strengthen supervision," said Li, who heads the state-owned Assets Supervision and Administration Commission.
There are 690 companies overseas with assets totaling 629.9 billion yuan (US$76 billion) that fall under the control of state-companies administered by the State Council, China's Cabinet, the report said.
Li said the government was investigating how many of those companies have been involved in high-risk business activities, such as derivatives trading, and is drafting rules to better control their operations, it said. No details were given.
China has been restructuring state-controlled industries to help make companies internationally competitive and stem massive losses due to poor investments and inefficient factories. Many smaller factories are being closed or privatized, while larger ones are being merged into massive industrial conglomerates.
More than 1,800 large and medium-size state companies, employing 2.8 million people, are expected to face bankruptcy in the next four years, the report said.
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