SOEs face rising operating costs and debts
Print Edition
CHINA’S state-owned enterprises face rapidly expanding operating costs and liabilities from January to October, the Ministry of Finance said yesterday.
Operating costs of SOEs grew 4.8 percent year on year to 38 trillion yuan (US$6.2 trillion) in the first 10 months, outpacing a 4.5 percent increase in operating revenue, according to the ministry data.
Liabilities rose 12.1 percent to 65.5 trillion yuan, 0.2 percentage points faster than the growth in assets.
Despite all the pressure, the SOEs reported nearly 2.1 trillion yuan in profits from January to October, up 6.1 percent year on year. In the first nine months, the profits increased 5.9 percent.
Li Jin, chief researcher with the China Enterprise Research Institute, attributed the slightly improved profitability mainly to the higher managerial levels at the SOEs.
But firms in nonferrous metals, coal, chemicals, petroleum, post and telecommunications sectors largely suffered losses.
Li blamed the losses on rapidly rising financial costs, which have been “the most important reason responsible for state firms’ losses.”
“This means the problem of high financing cost has spread to state firms. It is also difficult for some underperforming enterprises and companies in sectors suffering overcapacity to get credit from banks,” Li said.
With continued pressure on the Chinese economy, the State Council has pledged a list of measures to ease financing burdens for companies.
The pledge was followed by an unexpected decision by the People’s Bank of China, the central bank, to cut interest rates last Friday, the first time in more than two years.
The intention is to lower market interest rates and private financing costs to help alleviate problems facing many enterprises, the PBOC said in a separate statement after the interest rate announcement.
China has about 26,000 SOEs, according to a latest economic survey.
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