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Central SOEs Told to Focus on Key Areas
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Central State-owned enterprises (SOEs) in China are being asked to focus on their main areas of business and streamline their investment spheres.

The State-owned Assets Supervision and Administration Commission (SASAC), which supervises the 166 enterprises on behalf of the central government, issued a regulation yesterday to regulate their investment activities, including fixed-assets investment and equity acquisition within the mainland. Investments in overseas markets and those in the financial industry are excluded.

It said the central enterprises should make sure their investments comply with the development plan of the State and economic restructuring.

They are being advised to focus on their core business, while investment in other areas should first get permission from the SASAC.

The business scale of some of the enterprises is currently considered too wide, which leads to a waste of resources and creates investment risks and negligence in management.

"State capital should concentrate on key sectors that concern national security and the economy," an SASAC spokesman said yesterday.

The SASAC is offering guidance to help enhance the core competitiveness of these SOEs, prevent risks in investment and ensure the maintenance and appreciation of State assets, he said.

Such guidance will also encourage the enterprises to upgrade their business structures and development strategies, while curbing blind and irregular investments in sectors where they are not so competitive, the spokesman added.

The SASAC insisted it still respects the ability of enterprises to make investment decisions, but that they have to shoulder relevant liabilities themselves.

It also guarantees the transparency and fairness of the supervision on the enterprises' investment activities, the spokesman said.

The 166 central SOEs, the flagships of their industries, currently possess 10.6 trillion yuan (US$1.3 trillion) of assets, most of which are invested in the key economic sectors.

They made a total of 1 trillion yuan (US$125 billion) of investments in 2004, 95 percent of which were put in their core businesses, SASAC statistics reveal.

From this year, they are being asked to report their annual investment plan to the SASAC annually, including investment scales, funding resources and a general introduction to investment projects.

(China Daily July 7, 2006)

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