China's state companies expect 30% drop in 2008 profits

Special Report:Global Financial Crisisn

BEIJING, Jan. 5 (Chinese media) -- Profits at China's

centrally-administered state-owned enterprises (SOEs) are expected to fall 30

percent in 2008 from a year earlier, the first annual decline since 2002,

figures from the state assets watchdog showed Monday.

Profits in the 142 SOE giants would total 700 billion

yuan (about 103 billion U.S. dollars) last year, Huang Shuhe, deputy director of

the State-owned Assets Supervision and Management Commission (SASAC) told a

conference here Monday.

Natural disasters, government-capped energy prices

and the ongoing global financial crisis all contributed to the decline, Huang

said.

Sales revenue in these companies, however, increased

20 percent year-on-year to 11.5 trillion yuan last year, according to the SASAC.

The central SOEs reported 130 billion yuan in

economic losses because of the natural disasters last year, including the

snowstorms in early 2008 and the deadly earthquake in May. A total of 200

billion yuan would be needed for post-disaster reconstruction.

The global financial crisis also posed serious

challenges to the central SOEs with falling market demands, shrinking financing

channels and heavy investment losses.

The metallurgy, transportation, petrochemical,

electricity, auto and tourism industries were the worst affected, according to

the SASAC.

Meanwhile, the government-capped pricing on petroleum

and electricity to curb inflation and stabilize domestic market led to more than

260 billion yuan losses in oil refiners, power companies and grid operators.