More state companies' profit for social welfare

08:28, February 23, 2011      

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China will require state-owned enterprises to pay out more of their profits to the government to fund public welfare needs.

The change is part of reforms meant to reduce China's reliance on exports and investment by boosting domestic consumption.

These SOEs, including telecommunication giants and oil titans, now allocate up to 15 percent of their profits to the government.

There will be an "upward trend" in payments, Shao Ning, vice director of the State-owned Assets Supervision and Administration Commission, told a media briefing yesterday, in response to critics who charge that state firms are not allocating enough given their privileged status - in some cases being industry monopolies.

The reasonable ratio will be equal to the percentage of profits that listed companies in China pay out to shareholders, he said.

The 121 state firms directly overseen by the SASAC posted a combined profit of 1.13 trillion yuan (US$172 billion) last year and handed over about 60 billion yuan to the government - nearly doubled the payout in 2009, Shao said.

"The resources occupied by the state owned companies are out of proportion to the contributions they made to the society," business columnist Ye Tan wrote in a commentary yesterday. She said all the dividends paid by the state firms should be used for the people.

State companies have enjoyed subsidies and preferential policies from the government, which aims to turn some of them into globally competitive enterprises in industries from energy to metals.

But under its new Five-Year Plan, China targets to promote consumption which requires the state to share more wealth with the people.

Companies under SASAC include those in oil, banking, nuclear power, coal, shipbuilding, tobacco, steel and petrochemicals. Some are among the biggest companies in their global fields based on their dominance in their protected home market.

Shao said state companies still need to be made more efficient and competitive.

"We need to promote reforms of these companies so their internal mechanisms become more market-oriented," he said.

Source: Shanghai Daily
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