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China's Central SOEs' Profit Growth Slows to 3.6 Pct
Dec 21,2011 09:02CST
data analysis
China's centrally administered state-owned enterprises reported net profits of 831.79 billion yuan (USD 131.4 billion) during the first 11 months of 2011, up 3.6 percent year-on-year.

BEIJING, Dec. 19 (Xinhua) -- China's centrally administered state-owned enterprises (SOEs) reported net profits of 831.79 billion yuan (131.4 billion U.S. dollars) during the first 11 months of 2011, up 3.6 percent year-on-year, the country's SOE regulator said Monday.

The posted growth represented a sharp decrease from the 50.1-percent increase recorded during the corresponding period of 2010. Only 69.5 percent of China's central SOEs posted year-on-year profit increases during the first 11 months of the year, said Wang Yong, director of the State-owned Assets Supervision and Administration Commission.

Revenues for central SOEs climbed 22.6 percent year-on-year to reach 18.4 trillion yuan during the January-November period, a slower growth rate than the 34.7-percent surge reported during the same period last year, Wang said.

The companies paid 1.52 trillion yuan in taxes from January to November, an increase of 24.8 percent from one year earlier, he added.

Rising labor and raw material costs, tightened credit supplies and feeble recoveries in major economies resulted in the slower growth rates, said Liu Cheng, a professor at the University of Science and Technology Beijing.

"The results are in line with domestic and global economic conditions, and do not necessarily mean that the companies' entrepreneurial capabilities have deteriorated," he said.

Next year will be a tough one for the companies, as the global economic slowdown caused by the eurozone debt crisis and sluggish growth in the United States and Japan will likely curtail China's external demand, hamper Chinese exports and hinder growth in the country's ocean transportation industry, shipbuilding and overseas projects, Wang said.

Wang also warned of higher commodity prices in 2012, partly because of a depreciating U.S. dollar, global excess liquidity and rampant speculation.

"(Those factors) will also weigh on the companies' profitability, especially those involved in manufacturing industries," Wang said.

Strengthened inflationary pressures and looming asset bubbles in emerging markets will create more room for the upward movement of global commodity prices, he added.

Governments in some developed countries have encouraged their multinational companies to bring manufacturing jobs back home, while others have chosen to raise trade barriers to protect their own industries.

Coupled with the fact that many multinationals have been considering shifting their manufacturing bases to countries with cheaper labor costs and lower resource prices than China, pressures are mounting on the SOEs to enhance their competitiveness in order to gain an edge in the global market, Wang said.

He asked the companies to foster strategic emerging industries in 2012, upgrade traditional industries, hasten the development of the service sector, cut production costs and strengthen risk control.

The SOEs should make more efforts to improve their capacity for self-innovation, strengthen corporate management and focus on their main businesses instead of getting involved in too many sectors, he said.

The companies were also asked to improve their services and product quality, enhance brand-building and lean more on emerging markets to offset the effect of shrinking demand from the EU and the U.S.

Business revenues for the country's centrally administered SOEs accounted for approximately 42 percent of China's gross domestic product last year, while the taxes they paid accounted for about 17 percent of the country's total fiscal revenue, official data showed.

China currently has 117 central SOEs.


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