Profits of SOEs set to boost China's new growth momentum

A worker makes a special type of stainless steel in a factory owned by Taiyuan Iron and Steel. [Photo/Xinhua]

Their comments came after the nation's SOEs reported combined record net profit of 1.11 trillion yuan ($167 billion) in the first three quarters of the year as a result of supply-side structural reforms, reduction of the asset-liability ratio and additional curbs on capital outflows.

The figure represents year-on-year growth of 18.4 percent, and double-digit growth every month. Of the 98 central SOEs monitored, 56 saw profits grow by more than 10 percent, while 31 had profit growth of more than 20 percent.

Shen Ying, chief accountant at the State-owned Assets Supervision and Administration Commission, the country's top regulator of SOEs, said central SOEs are fostering new growth engines by expanding their footprints in strategic new industries and high-tech sectors, such as the digital and green economies, artificial intelligence and new energy vehicles.

So far this year, SOEs have invested 1.7 trillion yuan in research and development, accounting for 25 percent of the national total.

The total revenues of central SOEs amounted to more than 19 trillion yuan in the first nine months of the year, a year-on-year rise of 15.4 percent.

Shen said the government will support companies of all ownership types, along with foreign companies involved in joint ventures, when they participate in mixed-ownership reforms.

Peng Huagang, deputy secretary-general of the commission, said a more efficient, flexible and market-oriented management mechanism has laid the groundwork for reforms of SOE ownership: "Mixed ownership reform－diversifying the shareholding structure of SOEs－will continue to be deepened this year."

The commission is now working on a third tranche of mixed-ownership reform pilot projects for SOEs.

Peng said the scope of the third group will be expanded, with priority given to enterprises in provincial-level regions.

So far, 19 central SOEs in two batches－including China Unicom and China Three Gorges Corp－have undergone mixed-ownership reforms in the power generation, oil and gas, railway and telecommunications sectors.

As part of the reform, employees of some SOEs are being offered shares as an incentive, a plan that is likely to be accelerated and expanded, the government said.

According to SASAC, more than 90 percent of central SOE subsidiaries had been restructured by the end of last year, while more than 90 percent of enterprises were being supervised by provincial-level State asset regulators.

"Even though reform of the corporate system has entered the final stage, the task is still a hard one and requires a great deal of hard work from both government and companies," said Sun Ziyu, vice-president of China Communications Construction Corp, one of the country's largest providers of infrastructure projects by market share.

"As the reform deepens, optimizing asset structure is vital for our business to boost the competitive edge," he added. "Through alternative financing models, such as public-private partnerships, the company gained operational assets in the domestic market worth 250 billion yuan in sectors including ports, underwater tunnels and industrial parks in the first half of this year."