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SCMP Reporter

IN a move to assure foreign investors of its financial soundness, China's largest steel manufacturing group says it has only 6.18 billion yuan (HK$5.71 billion) in triangular debts.

  The announcement is expected to stall market speculation that Beijing's Shougang Corp is plagued by triangular debts of more than 10 billion yuan.

   One Chinese news report has put the figure at 13 billion yuan.

  Li Geng, managing director of Shougang Concord International, the Hong Kong-listed vehicle of the embattled steel giant, said the triangular debt level was close to the group's normal operational needs, in light of Shougang's mammoth size.

  'The level is neither high among China's large-and medium-sized enterprises, nor among the metallurgy enterprises,' said Mr Li, who is also deputy managing director of Shougang Holding (Hong Kong).

  Mr Li said the triangular debt had been falling since February, with lower accounts receivables. But he did not elaborate.

  Shougang Corp was among the worst hit under China's tight credit policy.

 Reports in China's Beijing Daily said claimants from Shandong and Shanxi provinces had said the group owed them money.

  Mr Li said since March when Bi Qun replaced Zhou Guanwu as the group's chairman, he had adopted a more market-oriented policy.

   The group stopped production of unpopular products and cut back investments.

  The group recently confirmed it scrapped projects worth more than 10 billion yuan.

  Mr Li said Shougang Corp expected to make a 5.4 billion yuan profit this year.

  He also stressed that the group's investment in Hong Kong would not be affected and projects would be proceeded as planned.

  Shougang (HK) will continue to hold interests in four listed companies, after the sale of Hoi Sing Holdings, a construction firm.

   The companies are Shougang International, Shougang Concord Grand, Shougang Technology and Shougang Century.

   This year, the Shougang group in Hong Kong would consolidate, he said. It expects profits of its listed companies and shipping division to surpass last year's, despite lack of property sales.

    And Shougang Concord Grand would concentrate on property projects, after selling its stake in Hoi Sing.

  Mr Li said the Chinese Government had assured the group that the arrest of its former Hong Kong chief Zhou Beifang in February had nothing to do with its operations in the territory.

  After the arrest, he said the group had conducted a review of its operations but did not find anything wrong.

  Mr Li said he had not be questioned by the authorities about Mr Zhou's alleged economic crimes.

   'I have been Mr Zhou's assistant for 10 years. I thought I would be questioned for Mr Zhou's case. But nobody has ever questioned me.

   'So it does indicate that his arrest is purely a personal matter,' he said.

  Last year, Shougang Corp sold 1.12 million tonnes of steel. More than 400,000 tonnes were exported to Hong Kong.



Shougang seeks to ease fears on debts