Public welcome plans for China's SOEs to give more back

Want China Times, Kao Hang and Staff Reporter 2013-11-23

A PetroChina gas station in Shenyang, Liaoning province. PetroChina is the listed
arm of CNPC, one of China's largest state-owned enterprises. (Photo/CNS)

A proposal was submitted to the Third Plenary Session of the 18th CPC Central Committee which concluded last week requesting state-owned firms to provide a higher ratio of their profits to the state coffers for improving public welfare. The ratio will be raised to 30% in 2020.

At present, the ratio falls between 5%-10% and some state companies do not need to submit any money at all. The low proportion of funds redirected to the state coffers has attracted a great deal of criticism from the public who feel that state-owned firms, which hold a monopoly on most of the government's resources, should give more back to society.

Some scholars consider even the increased proportion of 30% to be too low. By comparison, power companies in the United Kingdom are required to pay 70%-80% of their profits each year back to the government.

Academics noted that increasing the proportion will make state-owned companies more efficient, forcing them to eliminate assets that are not profitable and make them reconsider how to raise returns on equity.

In addition, with the higher income, the government can continue to subsidize social insurance and pensions.

Before the party's pivotal third plenum, there were concerns among the public that their expectations of government reform would not be met. But as more details of the issues discussed at the session have been published in an unprecedentedly open manner, the public was generally welcomed the reforms that have been announced so far, particularly linking reforms of state-owned companies with plans to improve public services.