State-owned enterprise bonus to benefit more people

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“State-owned capital can enrich the social security fund, and a larger proportion of the revenues from state-owned capital will be handed over to public finance, which will be of benefit to the general public, in accordance with the decision on comprehensive strengthening of reform which was approved by the CPC Central Committee at the Third Plenary Session of the 18th CPC Central Committee,” said Wang Hua, a retired teacher in Beijing.

The handover of a proportion of state-owned enterprises’ revenues is a fairly standard practice elsewhere in the world. Since 2011 China has increased the level of the premium charged to state-run enterprises. The charge for the tobacco industry is 20 percent, for the oil industry 15 percent, for steel, transportation and electronic industries 10 percent, and 5 percent to military industrial enterprises and enterprises created from research institutes.

“Stipulations about the level and the usage of the revenues which are handed over are not only one of the highlights of China’s decisions on reform, but also a hot topic in wider society,” said Bai Jingming, deputy director of the Research Institute for Fiscal Science, Ministry of Finance. “In the past there were two problems with the revenues from state-owned enterprises. One was that proportion of the turn-over was too small. The second was that the ways the money was applied were too limited. ”

“According to the decision on reform, by 2020 about 30 percent of revenues will be used to improve standards of living, which equals to the proportion of annual bonus. At the same time the bonus of state-owned enterprises becomes a part of the public finances which will be used to improve social security and general standards of living,” Bai Jingming said.

The decision pinpoints that state-owned capital should be applied to investment not only in key industries, but also in public welfare enterprises, to make greater contribution to the provision of public services.

Edited and Translated by Yao Chun, People's Daily Online

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