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Expert: Time to set up assessment mechanism on SOEs

By Yu Hongyan (chinadaily.com.cn)
Updated: 2008-11-19 17:29

At a time when enterprises are waiting for the government to pour money into aid, experts urge an assessment mechanism to regulate the possible capital injection process, according to the National Business Daily.

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"Under the gloomy economic condition, state-owned enterprises (SOEs) may count on the government for cash aid. Regulation on capital injection process should be the top task for State-owned Assets Supervision and Administration Commission (SASAC)." said Li Shuguang, one of the draftsmen for the National Assets Law.

He expected that capital injected in the SOEs come from SASAC's original assets and the 4 trillion-yuan ($586 billion) stimulus package.

"No matter where the money comes, it would be unfair for profitable SOEs and taxpayers if the money goes to loss-generating SOEs with operating and management defaults," said Li to the National Business Daily. "Before injecting capital into the money losing SOEs, the SASAC should set a benchmark to outline what kind of companies can be aided on what kind of problems."

He added that the SASAC should also investigate the operating status of SOEs to set a profit return ratio after the aided SOEs turn into the black, so as to seek a balance between SOEs and taxpayers.

"The SASAC should also take measures on salaries of top managers from the money losing SOEs that apply for the cash aid."

Shanghai Securities News reported on Sunday that two of the SASAC's holding airlines, the China Eastern Airlines and China Southern Airlines, would get up to 3 billion yuan to combat the rising operating costs and declining market.