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Renewed call for increase in dividend payouts by SOEs

(Global Times)

08:34, March 11, 2013

In response to recently released figures showing slim dividend payouts last year by State-owned enterprises (SOEs), members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), the top political advisory body, suggested late last week that cash-hoarding SOEs should be required to pay higher dividends, local media reported Sunday.

It's not the first time that the topic of inadequate SOE dividends has come up. The State Council said on February 5 that SOEs will be required to increase their minimum dividend payout ratio by 5 percentage points over the next three years.

Last year, China's SOEs paid between 5 percent and 15 percent of their net profit in dividends to government shareholders depending on their industry sector, Reuters reported on February 7. Such a dividend-to-earnings ratio is much lower than the global average.

According to Shanghai-based Wenhui Daily, government-backed enterprises in other countries such as the UK are generally required to pay from 20 percent to 25 percent at least.

The SOE dividend payout ratio should be pushed up to 25 percent, CPPCC member Zhou Hanmin said last week, and the proposal gained widespread support.

The majority of the SOEs' dividends have actually ended up going back to the SOEs in the form of government subsidies to support their energy-saving and innovative projects, Shanghai-based Jiefang Daily reported Wednesday.

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