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55 billion yuan support for SOEs

By Zhao Tingting (chinadaily.com.cn)
Updated: 2008-11-27 13:40

The State Council has approved the operational payment budget for centrally-administrated State-owned enterprises (SOEs) of 54.78 billion yuan ($8.02 billion) for 2008, according to the website of the State-owned Assets supervision and Administration Commission of the State Council (SASAC) on Wednesday.

According to the announcement, some 27 billion yuan, or about 49 percent of the budget will be spent on increasing assets of key SOEs pertaining to the national economy and the livelihood of the people and the national economic security. SOEs which claimed great losses in natural disasters will receive 19.63 billion yuan for reconstruction, or 36 percent of the budget. The budget also included 8.15 billion yuan for SOEs to adjust their industry deployment and structure.

"The State Council's approval of the budget is a part of the government's recent macro economic control policy, which will help SOEs set off the impact of the global financial crisis and pull through", an SASAC official told Securities Daily yesterday.

Centrally-administrated SOEs, excluding financial institutions, gained profits of 826 billion yuan in the first 10 months of this year, down 14 percent from the same period last year. Profits for power and petrochemical industries sharply dropped, said the Ministry of Finance yesterday. Centrally-administrated SOEs have posted declining profits for seven successive months.

The government's capital injection to key SOEs pertaining to the livelihood of the people and national economic security is reasonable, when they are faced with crisis arising from policies or other uncontrollable events, said the report, quoting Li Shuguang, professor with the China University of Political Science and Law. Yet the capital injection should follow certain standards, rather than just acting as compensation for those posting losses.