Regulator says China's central SOEs are in fine fettle

With better control over the debt-to-asset ratio, China's centrally administered State-owned enterprises will see both gross and net profit growth rates outpace the GDP growth rate this year, said Peng Huagang, secretary-general of the State-owned Assets Supervision and Administration Commission, the nation's top State asset regulator.

Central SOEs' profit margins of operating revenue, overall labor productivity and investment in research and development are also expected to increase, Peng told a media briefing in Beijing on Wednesday.

Analysts said the new goals uphold the spirit of the annual Central Economic Work Conference in December, suggesting that from now on, SOEs will stabilize growth and make more contributions to economic growth.

SASAC data showed central SOEs' operational performance reached a historic high last year, making important contributions to the overall growth of the national economy.

The total operating revenue of central SOEs rose by 19.5 percent to 36.3 trillion yuan ($5.71 trillion) in 2021. The average growth rate for the last two years reached 8.2 percent.

Last year, the total gross profit of central SOEs was 2.4 trillion yuan, up more than 30 percent year-on-year, which yielded a total net profit of 1.8 trillion yuan, up almost 30 percent as well.

The operating profit margin was 6.8 percent, up by 0.6 percentage point from a year earlier, and the debt-to-asset ratio was 64.9 percent, within the goal of under 65 percent set previously.

The central SOEs also invested more than 904 billion yuan in R&D in 2021, up more than 16 percent year-on-year.

According to Peng, the growth goal for the operating profit margin this year has been set at 0.1 percentage point, and overall labor productivity, which was 694,000 yuan per capita, is sought to be increased by 5 percent year-on-year.

"We will further prioritize stabilizing growth and preventing risks," Peng said. "Cross-cyclical adjustments will be implemented and measures to stabilize growth will be formulated as soon as possible for their effects to come into being early."

Enterprises should shoulder the key responsibility to prevent risks, and central SOEs must try their best to enhance operations and secure supplies, in order to facilitate economic growth, he said.

SOE reforms, he said, will be further deepened to energize market entities and create new development impetus, while the role of innovation, real economy-based growth and low-carbon development will be highlighted.

Zhou Lisha, a researcher with the Institute for State-owned Enterprises at Tsinghua University, said central SOEs' profit surge last year was mainly driven by the ongoing supply-side structural reform, which has been enhancing State-asset layout and resource allocation.

Strategic mergers and acquisitions and reform measures like the emphasis on innovation and the establishment of market-oriented operational and management mechanism, have accelerated operational upgrades and improved core competitiveness and development quality of central SOEs, Zhou said.