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SOEs lose over 30% of profits

CHINA'S state-owned enterprises lost more than 30 percent of their profits last year due to natural disasters and the global economic downturn.

The SOEs made 665 billion yuan (US$97.2 billion) in profits in 2008, said Li Rongrong, director of the State-owned Assets Supervision and Administration Commission, yesterday. But after discounting "policy-induced" losses in electric power, oil and petrochemical industries which totaled 266 billion yuan, the profits were almost unchanged with 2007's figure of 996.85 billion yuan, Li added. Global oil prices rose to a record high of US$147 a barrel last year, but domestic oil firms had to sell oil products at state-capped and below-cost prices.

The commission, which oversees the country's 141 SOEs, said that natural disasters, including snowstorms and the devastating Sichuan earthquake, led to 130 billion yuan of losses for them.

Li also called for faster restructuring to meet the target of reducing the number of SOEs to between 80 firms and 100 firms by the end of next year. From 2002 to 2008, the commission cut the number of SOEs from 196 to 141 while total assets rose to 17.7 trillion yuan from 7.13 trillion yuan.

China plans to set up an asset management company to run smaller and underperforming SOEs, and Zhang Wenkui, deputy director of the corporate research unit at the Development Research Center of the State Council, said that it will handle non-performing assets and quicken restructuring of SOEs.

The new firm will cut the number of smaller SOEs controlled by the central government by merging some of them, China Securities Journal quoted an unidentified official at the commission as saying yesterday.


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