BEIJING: Reducing debt and curbing risks remain priorities for China’s state-owned firms, the head of the country’s state assets regulator said on Saturday, as Beijing continues its restructuring and deleveraging efforts.
State Assets Supervision and Administration Commission (SASAC) Chairman Xiao Yaqing, also told reporters on the sidelines of China’s annual meeting of parliament that proposed overseas investments by Chinese state companies should be reviewed “fairly”.
“Chinese enterprises, especially state-owned enterprises, are independent market players first,” Xiao said. “You can’t scrutinise this type of investment more vigorously, while scrutinising other types of investment more loosely.”
In recent months, outbound investment by China’s state-owned enterprises (SOEs) has been increasingly scrutinised by foreign governments.
The US government has blocked several high-profile deals amid rising trade tensions between Beijing and Washington, while European leaders agreed last year to consider screening investments by state-owned Chinese firms.
The value of overseas assets held by China’s central government-controlled enterprises reached 7 trillion yuan ($1.1 trillion), Xiao said, with investments in more than 185 countries and regions.
The state assets administrator characterised further internationalisation by state firms as “inevitable and completely understandable”.
State firms, at home, would be pushed to improve their asset quality and boost their equity capital, Xiao said.
The regulator would seek to use debt-for-equity swaps to further reduce debt at state-owned companies, he added.
In 2015, Beijing introduced reforms to its state-owned industrial sector aimed at strengthening central government-owned enterprises, while introducing more professional management systems such as the adoption of boards of directors.
Xiao said those reforms would quicken this year, along with increased oversight by SASAC of enterprise activities.
The sector reported a rebound last year, with enterprises owned by China’s central government showing profit growth of 15.2 per cent, to 1.4 trillion yuan, the fastest in five years.
Total profit from China’s central government-owned firms for the first two months of 2018 rose 22.6 per cent from a year earlier to 266.7 billion yuan, Xiao said.
One important element of China’s state sector plan has been merging the giant state behemoths, in an attempt to create large, globally competitive conglomerates.
Sixty-seven central SOEs were on the Fortune Global 500 list in 2017.
