Central state-owned enterprises have seen both revenues and profits rise to their highest levels since the 18th National Congress of the Chinese Communist Party that was held in November 2012.
Official data indicates that China’s central SOE’s posted operating revenue of 19.1 trillion yuan for the first three quarters of 2017, for year-on-year growth of 15.4%.
Total profits for the same period were 1.1048 trillion yuan, for a year-on-year increase of 18.4%, and an extension of the ongoing growth trend witnessed since the fourth quarter of 2016.
During the third quarter central SOE’s posted successive increases in year-on-year profit growth, with readings of 16.4%, 17.3% and 18.4% for the months of July, August and September respectively.
“Growth in profit for central SOE’s during the first three quarters of 2017 was higher than growth in operating revenues by 3 percentage points,” said Shen Ying (沈莹), chief accountant of the State-owned Assets Supervision and Administration Commission (SASAC).
“This is a very good sign that central SOE’s are shifting from growth in scale to quality returns.
“Net profit growth exceeded profit growth during the same period – this is another marked feature of the year.”
Shen pointed out that the first three quarters of 2017 saw the best performance posted by central SOE’s in nearly five years, and serves as a sign that supply side reforms are achieving results, especially when it comes to the goals of removing excess steel and coal capacity, which have been completed in advance.
According to Shen the upcoming focus of supply side reforms will be deleveraging, with SASAC currently researching policies that cover four key areas including the strengthening of internal corporate management, optimisation of corporate capital structures, bolstering the capital scope of enterprises, and properly controlling corporate debt risk.
Shen said that SASAC will also use multiple means to raise the direct financing ratio for central SOE’s, as well as explore the marketisation of debt-equity swaps.