| China unveiled a new asset-management company that aims to restructure and merge small, uncompetitive state-owned enterprises (SOEs) on Wednesday.
The new firm, China Reform Holdings Corporation Ltd., will focus on "reorganizing small-sized SOEs which do not affect national security and are not crucial to the national economy," the State-owned Assets Supervision and Administration Commission (SASAC), the SOE watchdog, said in a statement.
The first-phase registered capital of the new company, which is wholly owned by SASAC, is 4.5 billion yuan (681 million U.S. dollars). SASAC has not yet revealed which companies will be involved in the reshuffling.
Xie Qihua, former chairman of the Baosteel Group Corporation, China's largest steel maker, has been appointed board chairman of the new company.Liu Dongsheng, an SASAC official, will act as general manager, it said.
"The launch of the new company marks an important move to optimize the relocation of state economic resources and to give state capital more vitality, control and impact on key sectors," Wang Yong, deputy director of SASAC, said at the launching ceremony.
He noted because the assets of the reshuffled companies took up a considerable amount of the entire state assets, the restructuring plays an active role in improving asset quality.
According to SASAC' s plan, the company will participate in the share-holding reform of the reshuffled enterprises, and will also invest in emerging industries with strategic importance.
Also at the launching ceremony, Wang stressed that the company is an asset management company rather than an investment group, ending rumors that it will become China's second sovereign fund after the China Investment Corporation (CIC).
He noted the new company's mission is explorative and challenging, which needs to deal with it in a proactive and cautious way.
In order to enhance the state company's efficiency and competitiveness, SASAC cut the number of SOEs under its direct control from 196 to 122 over the last seven years. They are expected to be further consolidated into around 100 by the end of 2010, according to SASAC plans.
However, SASAC officials said it remains difficult to meet the target in time.
"It takes time to meet the goal," said Shao Ning, deputy director of SASAC. He added that the restructuring should take place when the time is right, and should give priority to "quality" and "good results" to ensure stability of the enterprises.
In order to help the uncompetitive companies withdraw from the market in a stable manner, SASAC promised to offer support for the employers in those companies.
Zhou Fangsheng, an expert on SOE issues, said it is good news for the uncompetitive SOEs to be merged into the new company with their debt relieved.
But it is still quite explorative, he added.
The new company is the third oversight asset management company by SASAC, besides the China Chengtong Group and the State Development & Investment Corp.
Shao Ning told Xinhua that the previous two companies have their own business scope, besides dealing with non-performing assets. But the new company will only focus on asset management.
Profits of China' s SOEs rose by 43 percent year on year to hit 1.81 trillion yuan (271.92 billion U.S. dollars) in the first 11 months, according to the figures released by the Ministry of Finance on Dec. 17.
However, profits were concentrated in a small number of companies, such as oil producers and refiners, telecom operators and power companies which enjoy monopolies and easy bank loans.
Companies in the traditional sectors, such as textiles and light industries, reported meager profits.
A stronger presence of the monopolistic SOEs aroused complaints by the nation's private businesses, which had no easy access to bank credit but provided more than 80 percent of the job opportunities in the nation.
China's SOEs include SOEs directly controlled by the central government and SOEs supervised by local governments, but excludes state-owned financial enterprises.
(Xinhua News Agency December 12, 2010) | 
