SOEs asked to pay more for social net

08:25, December 31, 2010      

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Central government-administered enterprises have to pay more in dividends from 2011 as the government boosts funding of social services, the Ministry of Finance said yesterday.

State-owned tobacco, petroleum, petrochemical, power, telecommunications and coal companies will have to pay 15 percent of their after-tax profit to the state, up from 10 percent now, the ministry said in a notice posted on its website.

Such companies, including China Petrochemical Corp, State Grid Corp of China, China Huaneng Group Corp and China Telecommunications Corp, are required to pay the largest dividends to the state.

Companies in manufacturing, aviation, agriculture, medicine and construction are required to pay 10 percent of their net profits, while academic institutions, entertainment firms and producers of military equipment have to set aside 5 percent.

For example, under the new rule Baosteel Group, China Eastern Air Holding Co and Cofco Corp will have to pay 10 percent of their net profits as dividends next year.

These centrally-administered companies have to pay higher dividend requirements because China is spending more on social services, such as health care, education and public housing, as it beefs up efforts to improve the social safety net in order to boost domestic consumption as a major driver of the economy.

Profits for these firms were 802 billion yuan (US$121 billion) in the first 11 months, a 50.1-percent jump from a year ago, said the State-owned Assets Supervision and Administration Commission.

Source: Shanghai Daily
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