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SASAC halts investments on expansion

By Song Shengxia  (Global Times)

08:43, August 08, 2012

The country's State assets watchdog ordered central government-administered enterprises to put a brake on their investments on extravagant expansion and manage their capital chain to avoid risks as the economy faces challenges, the Economic Information Daily under the Xinhua News Agency reported Tuesday.

Investments with the purpose of scale expansion shall be stopped and all investments should be shifted to focus on technology, product and business mode upgrade, an official at the State-owned Assets Supervision and Administration Commission (SASAC) was quoted by the newspaper as saying.

Besides curbing blind investments, central government-administered enterprises should also pay attention to strengthening cash and capital chain management, the official said.

When the economy is not good, these enterprises should not only watch their cash flows carefully but also guard against capital problems of their upstream and downstream clients to prevent a chain reaction caused gaps in the capital chain, the official said.

This is not the first time the SASAC has warned central government-administered enterprises against the risks as the economy faces downward pressure.

In June, Shao Ning, vice chairman of the SASAC, said China's economy has entered into a period of contraction after 30 years of rapid expansion and asked central government-administered enterprises to prepare for the economic "winter" in the next three or five years.

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