China Tightens Control on SOEs' Investments

   Date:2007/08/03     Source:

The State-owned Assets Supervision and Administration Commission recently issued a notice to reiterate the report requirements of state-owned enterprises toward their non-core business investments in real estate, finance, stocks and insurance. 

The notice said there are problems in some enterprises' investment activities, with some companies "blindly" enlarging their investment scale in spite of high liabilities.

Also, certain companies have violated certain regulations to  invest in stocks and real estate with bank credit funds, and some enterprises make outbound investments, or try high-risk actions without informing the commission.

The commission urged state-owned companies to strengthen their investment risk management practices, calling to keep the investment scales within reasonable debt rates. In addition, SOEs must not illegally use bank credit funds.

Officials in SOEs who are found to have violated regulations will be monitored, the commission said.

The commission also urged major SOEs to review their investments made since 2006, make improvements to their investment management rules if required, and inform the regulator about any changes.

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