News,Cover,Issue 484, August 23 Translated by Tang Xiangyang Original article: [ Chinese ] The Ministry of Finance (MOF) is soliciting opinions from 82ministerial agencies in a bid to win support for their plan tostart collecting dividends from the over 6,000 central-ownedenterprises (COEs) that currently operate under the control ofvarious central government ministries and departments. China's COEs can be divided into two categories: The first are the123 COEs currently under the control of the State Council'sState-owned Asset Supervision and Administration Commission (SASAC)- the central government has plans to reduce the number of thesecompanies to between 80 and 100 by the end of the year. The othercategory of COEs includes those that are directly under the controlof certain central government ministries, agencies or departments. According to an anonymous source with the MOF, this project ispredicted to get approval from the State Council and moreministerial COEs will hand in profits next year. This move isunlikely to result in a large increase in the amount of dividendsbeing collected, rather it is being interpreted as a show of thecentral government's determination to better regulate themanagement of all COEs and to ensure that all COEs are treatedequally, Wen Zongyu, director of the Ministry of Finance sScientific Economic Research Institute, said.
Ministry Opinions Differ The above official with the MOF told an EO reporter, aftersoliciting opinions in August, The Ministry of Finance will talkwith ministries one by one about their respective feedback. ThoseCOEs affiliated with ministries will not start to be covered by thepolicy one by one, but ministry by ministry. For example, if wehave a successful discussion with the Ministry of Agriculture, thenall the COEs under its authority will be subject to the policy. Over 100 COEs under SASAC along with China National TobaccoCorporation and China Post have already placed their dividends intothe national, state-owned capital operation budget. Now the MOF istaking the lead to bring COEs under ministry control into the scopeof this new policy.
It s a tough job. Those COEs with a good business performanceare unwilling to be subject to the policy while the COEs who arewilling are all losing money. The remaining COEs are in complexsituations because of the current COE management system, thesource with the MOF said. Over the past few months, the MOF and the NDRC held many talks withministries about the policy before they formally solicited theiropinions. Herbal Slimming Coffee
An official with the MOF disclosed that after feedback is provided,the MOF will find out which ministries are willing to be includedin the plan, which are not and why, and whether such a reluctancecan be solved or not. Then it will hold more talks based on thisinformation. According to reports, the NPC, the MOF and the NDRC have all agreedto have more COEs hand in their dividends to the MOF, but there aremany different attitudes towards the plan among central governmentministries. Those ministries such as the Ministry of Agricultureand the Ministry of Railways, are willing to be included in theplan as long as they receive a subsidy. Although all the COEsunder the Ministry of Railways are big enterprises, they areactually losing money, Wen Zongyu said. Herbal Sex Pills Manufacturer
Profitable COEs are attempting every means possible to avoid beingcovered by the plan. Wen said, among ministry affiliated COEs,movie companies, TV stations, publishing agencies and videocompanies were big money-makers, but it is not easy to have themincluded because these COEs are linked with censorship bureaus andinclusion represents a conflict of interest between ministries. More COEs are obstructed by the current management system.According to Wen Zongyu, though the Ministry of Education has manyenterprises under its scope, most of them were started up byuniversities and research institutes. For example, the well-knownTsinghua TongFang and Tsinghua Ziguang companies are tied toTsinghua University and are both listed on the A-share market. China Japan Lingzhi Slimming Tea
Ifthe MOF wants to collect dividends from these two companies, it hasto go through their parent company: Tsinghua Asset Group. TongFang and Ziguang have relatively high profits. However,Tsinghua Asset Group has many other subsidiaries. If all of itssubsidiaries were to be integrated, it is possible that the Groupwould no longer profit and thus would not have any dividends tohand into the Ministry of Finance. Officials with the Ministry of Finance said, COEs under theMinistry of Education need further evaluation before being requiredto hand in profits because they are connected to public institutessuch as universities and research institutions.
Financial COEs have been considered to be a main target of thispolicy because they are able to make huge profits. But it isunlikely they will be included this year. According to officialswith the MOF, although financial COEs are big money-makers, theyare managed in a special system. An official with the MOF said: For example, all the commercialbanks are operating under the joint-stock system.
You may only gettheir profits through their investor: The China InvestmentCorporation (CIC). But the CIC actually has no money. It financesitself through issuing state bonds that it has to pay back one day.How can we collect profits from these types of COEs? This methodcan only be successful after this system is reformed. The China Post has been included among the ranks of COEs to paydividends to the MOF because it recently underwent a systemicreform integrating its postal businesses including mailing,publishing, currency exchange, logistics and stamp issuance and isnow under the authority of the State Post Bureau. Too Low a Ratio According to statistics provided by SASAC, from January to July,COEs have earned 755.8 billion yuan in profit, among which, COEsunder SASAC gained 619.2 billion yuan while ministry affiliatedCOEs earned 136.5 billion yuan, only accounting for 18 percent ofthe total.
When the SASAC was founded in 2003, 189 COEs were put under itsadministration. They are all big money-makers, Wen Zongyu said.The remaining COEs were divided into three categories. The first isformer public institutes; the second is enterprises founded byassociations unwilling to be managed under SASAC, such as theenterprises under the All-China Women s Federation and the thirdcategory is small-scale COEs who have been suffering from heavylosses. Wen Zongyu said, though there are now many COEs affiliated withministries, most of them have a poor performance record and aresuffering losses. They would not bring a large amount of dividendsto the MOF even if they were covered by this policy.
Over the past three years, the MOF has collected a total of 157.22billion yuan in dividends from these companies, but only about onebillion yuan of these funds has added to the MOF s revenue, therest has been ploughed back in to the expansion of the COE sector. Wen Zongyu said, even among those 128 COEs that were required topay profits to the MOF now, only 20 monopolies were actuallyhanding in their dividends. The others were paying either verysmall profits or nothing at all. With COEs earning more and more profits, the attempt to expand thescope of the state-owned asset operation budget and to increase theamount of profits COEs pay the MOF have been intensified.
Thistopic of expansion was discussed in this year s CPPCC (ChinesePeople s Political Consultative Conference) and NPC (NationalPeople s Congress). The MOF has also made including developed COEs that are ministryaffiliated in the state-owned asset operation budget one of its keyjobs for the second half of this year. Jia Zhan, director of theMOF s enterprise department, said that, aside from expanding thecoverage of the new plan, they would raise the dividend ratio COEsmust pay to the MOF. Since 2007, most of the country's COEs have been required to passon between 5 and 10 percent of their dividends to the SASAC everyyear.
In 2008, they handed in 7.9 percent of their profits to theMinistry of Finance; in 2009, they handed in 9.5 percent. Generally speaking, the ratio is too low. We are going to adjustit based on NPC requirements, Jia Zhan said. Wen Zongyu said both the government and academic circles consideredit necessary to raise the ratio. After the adjustment, thedividend ratio paid by COEs with an industry monopoly will beraised from 10 percent to somewhere between 25 and 35 percent.
Theratio for competitive COEs will be lifted from 5 percent tosomewhere between 8 and 10 percent. I believe this is not a veryhigh ratio. This article was edited by Rose Scobie and Paul Pennay.
Ministry Opinions Differ The above official with the MOF told an EO reporter, aftersoliciting opinions in August, The Ministry of Finance will talkwith ministries one by one about their respective feedback. ThoseCOEs affiliated with ministries will not start to be covered by thepolicy one by one, but ministry by ministry. For example, if wehave a successful discussion with the Ministry of Agriculture, thenall the COEs under its authority will be subject to the policy. Over 100 COEs under SASAC along with China National TobaccoCorporation and China Post have already placed their dividends intothe national, state-owned capital operation budget. Now the MOF istaking the lead to bring COEs under ministry control into the scopeof this new policy.
It s a tough job. Those COEs with a good business performanceare unwilling to be subject to the policy while the COEs who arewilling are all losing money. The remaining COEs are in complexsituations because of the current COE management system, thesource with the MOF said. Over the past few months, the MOF and the NDRC held many talks withministries about the policy before they formally solicited theiropinions. Herbal Slimming Coffee
An official with the MOF disclosed that after feedback is provided,the MOF will find out which ministries are willing to be includedin the plan, which are not and why, and whether such a reluctancecan be solved or not. Then it will hold more talks based on thisinformation. According to reports, the NPC, the MOF and the NDRC have all agreedto have more COEs hand in their dividends to the MOF, but there aremany different attitudes towards the plan among central governmentministries. Those ministries such as the Ministry of Agricultureand the Ministry of Railways, are willing to be included in theplan as long as they receive a subsidy. Although all the COEsunder the Ministry of Railways are big enterprises, they areactually losing money, Wen Zongyu said. Herbal Sex Pills Manufacturer
Profitable COEs are attempting every means possible to avoid beingcovered by the plan. Wen said, among ministry affiliated COEs,movie companies, TV stations, publishing agencies and videocompanies were big money-makers, but it is not easy to have themincluded because these COEs are linked with censorship bureaus andinclusion represents a conflict of interest between ministries. More COEs are obstructed by the current management system.According to Wen Zongyu, though the Ministry of Education has manyenterprises under its scope, most of them were started up byuniversities and research institutes. For example, the well-knownTsinghua TongFang and Tsinghua Ziguang companies are tied toTsinghua University and are both listed on the A-share market. China Japan Lingzhi Slimming Tea
Ifthe MOF wants to collect dividends from these two companies, it hasto go through their parent company: Tsinghua Asset Group. TongFang and Ziguang have relatively high profits. However,Tsinghua Asset Group has many other subsidiaries. If all of itssubsidiaries were to be integrated, it is possible that the Groupwould no longer profit and thus would not have any dividends tohand into the Ministry of Finance. Officials with the Ministry of Finance said, COEs under theMinistry of Education need further evaluation before being requiredto hand in profits because they are connected to public institutessuch as universities and research institutions.
Financial COEs have been considered to be a main target of thispolicy because they are able to make huge profits. But it isunlikely they will be included this year. According to officialswith the MOF, although financial COEs are big money-makers, theyare managed in a special system. An official with the MOF said: For example, all the commercialbanks are operating under the joint-stock system.
You may only gettheir profits through their investor: The China InvestmentCorporation (CIC). But the CIC actually has no money. It financesitself through issuing state bonds that it has to pay back one day.How can we collect profits from these types of COEs? This methodcan only be successful after this system is reformed. The China Post has been included among the ranks of COEs to paydividends to the MOF because it recently underwent a systemicreform integrating its postal businesses including mailing,publishing, currency exchange, logistics and stamp issuance and isnow under the authority of the State Post Bureau. Too Low a Ratio According to statistics provided by SASAC, from January to July,COEs have earned 755.8 billion yuan in profit, among which, COEsunder SASAC gained 619.2 billion yuan while ministry affiliatedCOEs earned 136.5 billion yuan, only accounting for 18 percent ofthe total.
When the SASAC was founded in 2003, 189 COEs were put under itsadministration. They are all big money-makers, Wen Zongyu said.The remaining COEs were divided into three categories. The first isformer public institutes; the second is enterprises founded byassociations unwilling to be managed under SASAC, such as theenterprises under the All-China Women s Federation and the thirdcategory is small-scale COEs who have been suffering from heavylosses. Wen Zongyu said, though there are now many COEs affiliated withministries, most of them have a poor performance record and aresuffering losses. They would not bring a large amount of dividendsto the MOF even if they were covered by this policy.
Over the past three years, the MOF has collected a total of 157.22billion yuan in dividends from these companies, but only about onebillion yuan of these funds has added to the MOF s revenue, therest has been ploughed back in to the expansion of the COE sector. Wen Zongyu said, even among those 128 COEs that were required topay profits to the MOF now, only 20 monopolies were actuallyhanding in their dividends. The others were paying either verysmall profits or nothing at all. With COEs earning more and more profits, the attempt to expand thescope of the state-owned asset operation budget and to increase theamount of profits COEs pay the MOF have been intensified.
Thistopic of expansion was discussed in this year s CPPCC (ChinesePeople s Political Consultative Conference) and NPC (NationalPeople s Congress). The MOF has also made including developed COEs that are ministryaffiliated in the state-owned asset operation budget one of its keyjobs for the second half of this year. Jia Zhan, director of theMOF s enterprise department, said that, aside from expanding thecoverage of the new plan, they would raise the dividend ratio COEsmust pay to the MOF. Since 2007, most of the country's COEs have been required to passon between 5 and 10 percent of their dividends to the SASAC everyyear.
In 2008, they handed in 7.9 percent of their profits to theMinistry of Finance; in 2009, they handed in 9.5 percent. Generally speaking, the ratio is too low. We are going to adjustit based on NPC requirements, Jia Zhan said. Wen Zongyu said both the government and academic circles consideredit necessary to raise the ratio. After the adjustment, thedividend ratio paid by COEs with an industry monopoly will beraised from 10 percent to somewhere between 25 and 35 percent.
Theratio for competitive COEs will be lifted from 5 percent tosomewhere between 8 and 10 percent. I believe this is not a veryhigh ratio. This article was edited by Rose Scobie and Paul Pennay.