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New body planned to run underperforming SOEs

By Li Fei (chinadaily.com.cn)
Updated: 2009-03-04 19:49

The government may set up a new asset management firm to run smaller and underperforming State-owned enterprises (SOEs) currently under the administration of the country's top State asset watchdog, as part of efforts to speed up the restructuring of the mammoth SOE sector.

Related readings:  China to carry out SOE consolidation plan  China plans cap on SOE execs's payroll  Official urges tighter supervision of SOEs  China's SOEs profits drop in 2008

The planned company, which would be put under the roof of the State firm watchdog State-owned Assets Supervision and Administration Commission (SASAC), is seen as a step to trim the large number of State firms the SASAC currently administers.

The SASAC has long proposed to cut the number of the biggest SOEs under its supervision to 80 or 100 by 2010, from the current 141.

"Some relatively smaller, underperforming SOEs are likely to be put into this new asset management company, while those larger ones will still be administered directly by the SASAC," the Beijing-based business newspaper Economic Observer reported over the weekend, quoting unidentified SASAC officials.

The newspaper said one of the deputy directors from the SASAC would serve as chairman of the proposed asset management company, while a senior executive from China Chengtong Group, a logistics and warehousing conglomerate administered by the SASAC, will be its general manger.

Preparation for the new company is "in final dash" and details are expected after the annual National People's Congress meeting, which ends March 13, the newspaper said.

Zhou Fangsheng, deputy head of the SASAC's Bureau of Enterprise Reform, which is reportedly involved in drafting the plans for the proposed asset management firm, declined to comment on the issue when contacted yesterday.

The company "will speed up the restructuring of the SOE sector", said Zhang Wenkui, a researcher with Enterprise Institute at State Council’s Development Research Center, a government think tank.

The planned company, Zhang said, would help the SASAC in its efforts to dispose of the non-performing assets at some of its directly administered SOEs.

By serving as a holding company, the new vehicle could accelerate the industry restructuring and consolidation, as it would become easier to initiate mergers among the companies it controls, the researcher said.

Initial capital for the new company would "amount to several billions", the newspaper said.

The SASAC currently administers 141 State-owned firms, all in non-financial industrial sectors.