Central SOEs see drop in performance

Govt stimulus not enough to inject vitality into State sector

China's centrally administrated State-owned enterprises (SOEs) posted a slower growth in operating revenues and profits in the first half of 2014, the State-owned assets watchdog said on Wednesday.

Combined operating revenue of central SOEs rose 5.1 percent to 12 trillion yuan ($1.95 trillion) in the first six months, compared to a 9 percent year-on-year growth in the first half of 2013, according to data from the State-owned Assets Supervision and Administration Commission (SASAC).

The total profit of the enterprises amounted to 674 billion yuan in the first six months, a 5.5 percent year-on-year growth, also down from 18.2 percent growth seen in the same period a year ago, data from the SASAC showed.

The latest statement from the watchdog did not specify business performance of individual companies. But earlier data from the Ministry of Finance showed that among 113 central SOEs supervised by the SASAC, 32 saw a decline in profits in the first five months of this year, without specifying their names.

"The worsening business performance of central SOEs was mainly dragged down by those in the coal and steel sectors that have been faced with overcapacity and higher environmental protection standards," Cui Changlin, an expert with the China Society of Economic Reform, told the Global Times Wednesday.

Unlike a 4 trillion yuan fiscal stimulus package in 2008 that benefited many central SOEs, the mini-stimulus measures adopted this year could not achieve a similar effect on inflating the performance of central SOEs, according to Cui.

"Poor corporate governance has also hindered the development of central SOEs," Cui said.

Some central SOEs have been found to have violated the country's economic and anti-corruption policies, the National Audit Office (NAO) said on June 20.

For instance, affiliates of China Resources purchased vehicles in numbers and at prices far beyond the limits set by the SASAC, with the most expensive car bought reaching over 2 million yuan, according to the NAO.

China's top policymakers have vowed to reform SOEs by encouraging them to adopt a mixed-ownership structure since the Third Plenary Session of the 18th Communist Party of China Central Committee held in November 2013.

In SASAC's latest effort announced on Tuesday, six central SOEs, including China National Building Materials Group and China National Pharmaceutical Group Co, have been selected for a pilot program to reform their ownership and management by allowing injections of private capital in some, while empowering the boards of directors in others.