Tighter supervision on central SOEs' investment

China's State-owned Assets Supervision and Administration Commission (SASAC) stated on August 1 that central State-owned companies (SOEs) should report investments timely, in a bid to limit investment risks.

The investments refer to SOEs' major overseas investments and domestic investments in sectors such as real estate, securities, and insurance.

Under the statement, the companies which are caught ignoring the new regulation will be blacklisted, and the executives responsible will be punished.

In the statement, SASAC urged central SOEs to provide timely reports on capital spending in non-core businesses.

According to the administrative rules issued by SASAC in August 2006, central SOEs should concentrate on their core businesses and allocate no more than 10% of their total investment in areas outside key activities.

SASAC said some SOEs are increasing their investments unwisely, which may lead to high levels of debt. Companies were called for improving their risk management and maintaining reasonable debt levels.

The China Banking Regulatory Commission (CBRC) announced on June 18 that two SOEs, China Nuclear Engineering and Construction (Group) Corporation and the China Shipping (Group) Company, misappropriated RMB 4.46 billion (US$589.95 million) in bank loans to invest in the equity market and real estate projects.