SOEs to pay dividends to the government

October 02, 2006 | BY

clpstaff &clp articles &

China is expected to release rules requiring state-owned enterprises (SOEs) to submit their dividends to the government from the beginning of 2007. The…

China is expected to release rules requiring state-owned enterprises (SOEs) to submit their dividends to the government from the beginning of 2007. The rules, which originate from the Ministry of Finance and the State-owned Assets Supervision and Administration Commission (SASAC), are currently under review by other government departments.

The rules generally outline principles and directions for state-owned capital budgets, with detailed regulations on the proportion of profits to be paid out and how they should be used. The payouts will likely go towards public utility projects and funding industrial development.

According to a World Bank report, if China's SOEs offers 50% of their profits to the government (accounting for 6.5% of the country's gross domestic product in 2004), China would see an 85% increase in public funding for education and healthcare.

China Daily reports that revenues from SOEs totalled Rmb950 billion (US118.7 billion) in 2005. Improved management and innovative technology have helped the first-half profits of 165 key SOEs to increase by 16% and sales revenues to jump by 20.6%, compared with the same period in 2005.

SASAC currently oversees 165 of the 120,000 SOEs in China, which have used their profits for their own development to date. However, now that their situation has improved, Li Rongrong, chairman of SASAC, says their revenues should be used to help the public and fiscal needs.

This premium content is reserved for
China Law & Practice Subscribers.

  • A database of over 3,000 essential documents including key PRC legislation translated into English
  • A choice of newsletters to alert you to changes affecting your business including sector specific updates
  • Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
For enterprise-wide or corporate enquiries, please contact our experienced Sales Professionals at +44 (0)203 868 7546 or [email protected]