Earnings jump 57pc at state-owned firms

PUBLISHED : Saturday, 17 July, 2010, 12:00am
UPDATED : Saturday, 17 July, 2010, 12:00am

Net profit at mainland state-owned enterprises jumped 57.1 per cent in the first half to 927.6 billion yuan (HK$1.06 billion), driven by the lucrative nonferrous and power sectors, official figures showed yesterday.

Revenue rose 40.9 per cent to 14.2 trillion yuan, the Ministry of Finance said in a statement on its website.

The bigger profit rises at nonferrous and power companies reflected low bases of comparison in the same period in 2009, the ministry said. Automobile, infrastructure and property sectors continued to post relatively fast growth, but steel, petrochemical, oil and coal companies showed month-on-month declines.

The profit rises at state-owned enterprises reflected the continuing impact of the central government's 4 trillion yuan stimulus package.

According to figures from independent think tank Unirule Institute of Economics, state-owned enterprises' accumulated profit totalled 8.5 trillion yuan from 1994 to 2009. In 2009, profits of state-owned enterprises accounted for one-fourth of the nation's gross domestic product.

Rising profits at many state-owned enterprises are increasing pressure on government for their earnings to be distributed more fairly.

Some critics have called on state-owned firms to share more of their profits by setting a unified system of dividend payments to government.

Government advisers said they wanted to see more money going to help with social security costs, adding that too much was being spent on the welfare of staff and their families. 'As the elder brothers, you have to take care of your family members,' Zhang Meiying, vice-chairman of the National Committee of the Chinese People's Political Consultative Conference, told media recently.

'They can't leave the poor family members alone after taking advantage of their political connections.'

At the same time, the State-owned Assets Supervision and Administration Commission is reviewing tax expenses and sponsorship contributions from state-owned enterprises to local governments as Beijing seeks to reduce the financial burden on the corporate sector imposed by such donations.

Beijing is also seeking to chart a delicate course as the impact of the stimulus package winds down and the government seeks to cool off a credit boom.

The world's third-largest economy expanded by 10.3 per cent in the second quarter over a year earlier, down from the first quarter's explosive 11.9 per cent growth, the National Bureau of Statistics said on Thursday.