Review into investments by SOEs

BEIJING,May 7-- China¡¯s state-owned asset regulator will launch an investigation into investments made by centrally administered state-owned enterprises in the financial sector in a bid to help them avoid risks.

A total of 28 SOEs, including Air China, China Eastern Airlines and China COSCO Holdings Co, have invested in financial derivatives but most of them suffered losses.

The overriding concern of the SOEs, when they invest in financial derivatives, is to ensure they avoid risks and not to speculate, said Li Wei, vice director of the State-owned Asset Supervision and Administration Commission.

Air China lost 7.5 billion yuan (1.1 billion U.S. dollars) on fuel-hedging contracts by the end of last year, and China Eastern's wrong-way bets on hedging dragged its revenue down 6.4 billion yuan.

Li said SOEs which plan to invest in financial derivatives must meet four conditions - abiding by hedging rules, hiring financial institutions for consultation, controlling risks and getting the commission's approval.

"SOEs are short of financial talent to deal in such investments, which led to an underestimation of risks and violations, so the commission will issue suggestions after an investigation," Li said.

He also urged local state-asset regulators to investigate locally administered SOEs.

The SOEs have seen their first annual decline in net profit last year since 2002, diving more than 30 percent from a year ago to 665.29 billion yuan.

(Source: Shanghai Daily)

Profit surge of Chinese central SOEs fuels call for fair distribution

BEIJING, May 6 (Xinhua) -- An 85.7 percent
month-on-month surge in the profits of central state-owned enterprises (SOEs) in
March has triggered call for a fair distribution of their profits.

The 138 SOEs made a profit of 62.29 billion yuan
(about 9.1 billion U.S. dollars) in March.

"In France, SOEs turn in 50 percent of their profits
as dividends to the government. SOEs in Sweden, Denmark and the Republic of
Korea turn in about one third to two thirds of their profits," Zhu Lijia, a
professor with the National School of Administration, told Xinhua Wednesday. The
school specializes in training cadres

"SOEs only turn in at most ten percent of their
profits as dividends to the government. The percentage is too low," Tang Min,
deputy secretary of China Development Research Foundation, which is affiliated
with the Development Research Center of the State Council (cabinet).

"The international average is about 30 percent," he
said.

Centrally controlled SOEs were required as of 2007 to
pay 5 percent to 10 percent of earnings as dividends, depending on their
industries, under a regulation issued by the State Council.

Analysts also said that central SOEs have benefited
most from the 4 trillion yuan stimulus plan announced last year, compared with
the private sector.