The State-owned Assets Supervision and Administration Commission (SASAC) aims to transform as many existing state-owned enterprises (SOEs) into investment companies as possible rather than set up new ones as it overhauls the way it manages state assets, the China Securities Journal reported Monday, citing an unnamed person with knowledge of the matter.
Possible candidates for the program’s test run include China Resources Group, State Development and Investment Corp., China Poly Group Corp., China Merchants Group and Sinopec Group.
According to a commission official, some SOEs could be merged and the selected companies may be allowed to invest and review their performance in line with market principles, the report said. The commission will try to implement the plan by 2020.
The moves are aimed at transforming the SASAC into a “Chinese Temasek”, the report said. Assets will be categorized into three main types — industry investment companies, state-owned investment holdings and state-run companies. Such reforms will focus on restructuring existing state-owned companies, rather than setting new ones, it said.
Over the next seven years, the SASAC will gradually grant more administrative power to state-owned companies and their units while focusing more on such matters as how to boost investment returns, the report said.
The idea of following the model of Singapore’s Temasek Holdings came from the third plenum of the Communist Party’s 18th Central Committee last November. China will support some qualified state-owned enterprises to set up state investment companies similar to the Temasek model, which has been studied and followed by many countries due to its successful record, the National Business Daily reported on Nov. 18, citing unnamed sources.
But investors should not pin too much hope on this plan as it is quite difficult for a huge economy like China to copy the model of a small city-state such as Singapore, observers said. First, it is unlikely that Beijing’s top leaders will give up the stability of the nation’s job markets to seek higher SOE profits.
Second, the lack of transparency in the operations and financial data of SOEs remains the biggest obstacle for the SASAC to restructure its assets. Lastly, as many SOEs are now operated individually, their executives tend to oppose mergers and acquisitions among themselves. To form a Chinese Temasek may be just a dream that is unlikely to come true within a decade.
China Credit Trust offers way out of troubled trust, paper says
China Credit Trust Co. Ltd. will let investors in a troubled multibillion yuan trust product sell their stakes and recoup their investment, the China Securities Journal reported Tuesday, citing a company statement. Investors have until Jan. 29 to sign an agreement to sell their shares in the product back to China Credit Trust or extend the product after the Jan. 31 expiration date, the report said. About 700 wealthy investors put a combined 3.03 billion yuan (US$501 million) into the product to fund a loan to unlisted coal miner Shanxi Zhenfu Energy Group Ltd., which later collapsed. The product was distributed by Industrial and Commercial Bank of China (601398.CN, 01398.HK).
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