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China Welcomes Foreign Investors in SOEs Assets Restructuring
China Cinda Asset Management Cooperation Monday announced a list of 38 projects that foreign business people are welcome to participate in, to help restructure the country's state-owned enterprises (SOEs).
Tian Guoli, vice-president of Cinda, made the announcement while speaking to representatives of multinational corporations, who are attending the on-going fourth China Fair for International Investment and Trade.
This is the first time in China that asset restructuring projects have been available to domestic and overseas business people. Cinda is the first of the country's four asset management companies to announce such a list.
The aim of the list is to attract foreign investment to help reform Chinese state-owned enterprises, he said.
The projects include dozens of large and medium sized SOEs in the phosphor-ammonium industry, alumina powder production and paper making.
Foreign business people are welcome to handle the projects by converting and restructuring debts, Tian said, while Cinda will provide a series of favorable policies for the investors.
Many SOEs are running at a loss following the long-term effects of a planning economy system. The country's commercial banks have kept many long-standing bad loans to SOEs, causing a severe impact to the country's economic development.
To solve the problems, China set up China Cinda Asset Management Cooperation in April 1999, the first company of its kind in China.
Following Cinda, three other firms: Huarong, Changcheng and Dongfang, were set up. They are responsible for the acceptance, management and handling of debts and other bad assets.
So far, a total of 1,300 billion yuan (US$156.6 billion) of bad assets from SOEs have been turned over to the four asset management companies from banks.
Cinda is responsible for handling 350 billion yuan of bad assets from SOEs in the fields of infrastructure construction, power, chemicals, machinery, manufacturing, raw materials and real estate.
Over the past year, Cinda and three other asset management firms have played an important role in promoting SOE reform through asset restructuring and debt converting.
Hu Jingyan, director of the foreign investment department under the Ministry of Foreign Trade and Economic Cooperation, said that 2000 is the last year of the central government's three-year campaign to lift SOEs out of the red.
China will open wider its domestic market, Hu said, foreign investment is warmly welcomed in the reform of SOEs.
"Investment, technology and management expertise will help speed up the reform and development of SOEs," he said.
Wu Yalin, senior financial manager of Delotte Touche Tohmatsu Consultants (Shanghai) Ltd., said that purchasing or investing in Chinese bad assets is a new, fast and cheap way for multinational corporations to enter China's market.
"This will provide the corporations opportunities to enjoy the country's natural resources and labor resources, ready-made sale network and potential profits," he said.
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