China’s state firms needed to provide ‘economic foundation’, but pressure mounting due to ‘hidden losses’
- State-owned enterprises account for around 32 per cent of the total market capitalisation in the stock market and hold more than 56 per cent of corporate assets
- Beijing has also pledged continuous support for the private sector, but they have problems of their own and are lagging behind state firms due to a lack of investment
Chronic coronavirus restrictions, surging raw material costs and a property slump are taking a financial toll on China’s state-owned companies, with slumping profits coming at a time Beijing wants to increasingly rely on its public sector to support the slowing economy.
State-owned enterprises account for around 32 per cent of the total market capitalisation in the Chinese stock market and hold more than 56 per cent of China’s overall corporate assets, according to official data.
But 258 state firms listed on the Chinese stock market posted a net loss during the first three quarters of the year, up from 184 a year earlier, with two national airlines suffering the largest deficits among all listed companies, according to the Post’s calculation based on data from the domestic provider Wind.
There were hidden losses in SOEs, especially those which have made big steps in going international or borrowing many foreign debts are under great pressure
Overall profits at state-owned enterprises (SOEs) also dropped by 1.1 per cent year-on-year during the January-September period, according to China’s Ministry of Finance, although this represented a slight improvement from losses of 1.5 per cent in the first eight months of the year.
“There were hidden losses in SOEs, especially those which have made big steps in going international or borrowing many foreign debts are under great pressure,” a Chinese government adviser, who wished to remain anonymous due to the sensitivity of the issue, told the Post.
