SOEs Ready for Overseas Equity Transfer

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Last updated at: (Beijing Time) Tuesday, September 24, 2002

SOEs Ready for Overseas Equity Transfer

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The guideline for overseas investors to purchase or take over equities of Chinese State-owned enterprises (SOEs) has run across the touching strokes and will be published at a good timing, according to the Beijing-based International Finance News.

Instead of the usual practice of once-a-case examination and approval, the guideline will make some policy breakthroughs in channeling foreign capital into SOEs, the newspaper quoted officials as saying, but did not disclose what the breakthroughs are about.

Jointly drafted by the State Economic and Trade Commission (SETC) and the Finance Ministry, the guideline maintains policy-makers' principal ideology of opening-up wider and leveraging more foreign investment to re-invigorate the ailed SOEs, the newspaper said.

Last week, sources at the Ministry of Foreign Trade and Economic Cooperation (Moftec) said they have also mapped out, together with the Finance Ministry, a similar directive on overseas investors' holding and purchasing domestic firms' shares or assets, which is now waiting for relevant authorities' nod.

The two documents will regulate overseas investors' purchase of domestic firms from distinct perspectives, which might have some overlaps in content but no clash, the newspaper quoted SETC official as saying.

As for the percentage of shares of domestic firms open to foreign investors, the two documents will follow the varied rates defined early this year by the State Council, China's cabinet, to different industrial categories.

These rates are also in line with the specific commitments by China while negotiating its World Trade Organization entry, the SETC official said.

In practice, the actual percentage of shares of domestic firms allowable to overseas investors might be higher.

Early last week, Wu Yi, state councilor and also the former Moftec head, told a seminar on multinationals' investment to China that the proportion of equities of domestic firms held by foreign investors should be "let go", as long as these firms are not pertinent to the life-or-death of China's national economy, or must be controlled by China in accordance with China's relevant commitments.

Despite the lukewarm sentiment in the global merge and acquisition (M&A) market, China is rising as a highlight with the M&A transactions worth US$11.9 billion in the 2nd quarter of this year, said the newspaper.

Analysts think the electricity and the energy industry at large will be the pets in China's M&As.

In addition, foreign-funded but China-located firms will be another favorite item of M&A deals.

By PD Online staff Forest Lee

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