SOEs to Open Door to Overseas Investors

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Last updated at: (Beijing Time) Tuesday, December 25, 2001

SOEs to Open Door to Overseas Investors

Overseas investors are expected to become shareholders in key State-owned enterprises (SOEs) as a result of the government's decision to promote Sino-overseas co-operation to push the reform of SOEs.

Froeigners allowed to hold shares

The State Development Planning Commission (SDPC) said Monday the government is planning to sell a certain amount of SOE shares to foreigners over the next five years to speed up the restructuring of SOEs.

Overseas investors will even be allowed to hold the controlling stake in large SOEs, except for those of key importance to national or economic security, the commission said in the section of the 10th Five-Year (2001-05) Plan outlining the use of foreign capital.

Cooperation with overseas investors

The government will choose a group of large SOEs to be listed on overseas stock exchanges, and encourage "strategic partnerships'' between multinationals and Chinese businesses, according to the plan unveiled by the commission Monday.

The plan outlines how the State will expand co-operation with foreign investors, gradually shifting its focus from attracting capital to advanced technology and management and special expertise.

The service industry, including banking, telecommunications, securities, insurance and tourism, will gradually become another focal point of co-operation. During the past two decades, China has mainly opened its manufacturing industry to overseas investors.

And China will continue to encourage foreigners to invest in agriculture, basic industries, infrastructure construction and environmental protection.

Bai Hejin, president of China Academy of Macroeconomics Research under the SDPC, said China's WTO entry will boost the country's economic co-operation with foreign countries and investors.

"China's WTO membership has reduced risks and cost for foreign investors and more capital and advanced techniques and expertise will flow in," Bai said.

Investment in the west preferred

However, the country prefers foreign investors to start businesses in the western regions, where they will enjoy more favourable taxation policies for the next 10 years, according to last week's investment guidance made public by the commission, China's highest macro economic planning authority.

From 2001 to 2010, the enterprises' income tax will be 15 per cent if they invest in industries that the government encourages.

The 15 per cent tax rate is lower than the rate for foreign investors in China's other regions. Moreover, the governments of ethnic minority autonomous regions may provide further tax breaks.

Commentary: Unswervingly Deepening SOE Reform

The People's Daily publishes a commentary Thursday encouraging further reform of state-owned enterprises (SOEs). While listing the remarkable achievements made so far in SOE reform, the commentary mainly focuses on how to deepen the reform and make new progress. (Full Story)

China's SOEs More Vigorous

China's state-owned enterprises (SOEs) acquired a record profit of 283.38 billion yuan in 2000, up 147.3 percent on an annual basis and 147.8 billion yuan more than the historical peak in 1994.

According to the figures released by the Ministry of Finance July this year, China had 191,000 SOEs in 2000, with assets of over 16 trillion yuan, up 10.2 percent compared to the previous year. (Full Story)

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