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Profit for all from SOEs

(China Daily)
Updated: 2009-04-20 07:45

State-owned enterprises (SOEs) turn in only about 10 percent of their profits to the central government and it is high time to readjust that proportion, says an article of the Yanzhao Metropolis Daily. Following is an excerpt:

"Where have the profits of State-owned enterprises gone"? That is a question attracting wide public concern nowadays, with numerous postings on the Internet as well as other media giving it much attention.

Since 1993, the accumulated profits reserved by the SOEs amounted to several thousand billion yuan. Director of State-owned Assets Supervision and Administration Commission Research Center Wang Zhongming told the media that the remaining 90 percent of profits have been spent on the "expansion of production, the costs of reform and other practical expenditure". However, details of profits spending have never been revealed to the public.

In fact, it can be said that much of the profits have gone to the pockets of those in the enterprises. Statistics show that in 2005 there were 8.33 million employees in main monopolized industries, which is less than 8 percent of the overall employees in China. However, their total incomes were estimated to be 55 percent of the sum of all employees' wages in China. Moreover, there had been no limit on the maximum income of their senior management before this year.

In common international practice, profits of SOEs are not directly withheld by the enterprises themselves. The SOEs turn over their profits to the State coffers and the department in charge will subsequently decide whether the profits should be spent on public expenditure or allocated to enterprises.

It is high time for China to adjust the percentage of profits earned by the SOEs toward the State coffers, since it is rather low compared with that of other countries. What is more, it will cause serious social discontent if we continue to tolerate this sort of arrangement that withholds large profit.

(China Daily 04/20/2009 page4)