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State wants close watch on its enterprises

By Xin Zhiming (China Daily)
Updated: 2008-08-11 14:54

Minister of the State-owned Assets Supervision and Administration Commission (SASAC) Li Rongrong said Sunday that previously locked-up shares for major public-listed State enterprises should not be floated on the market on a large scale over a relatively long period of time.

The Chinese stock market, which tumbled 4.47 percent on Friday, has recently been skidding. The downward action is partly due to fear of the upcoming release of the shares, which can now be floated after a lock-up period. They were previously prohibited from trading prior to share-and-merger reforms in 2005.

It is estimated the shares could reach 210 billion yuan ($30.7 billion) in August, compared with 45.5 billion yuan in July and 99.4 billion yuan in June.

"It (large-scale floating of such shares) is impossible," said Li, who looks after a commission in charge of 149 major State enterprises, including heavyweights the world's largest mobile operator by subscription China Mobile and PetroChina, one of the world's top ten oil companies.

"It is mainly an issue played up by the market," he said.

Still, for most State enterprises he said, "The current requirement is to let the State play the dominant role in them, especially in those under the supervision of SASAC."

However, shares of the enterprises can still be floated, Li said. But, he emphasized they could not be floated on a large scale over lengthy periods of time.

Li also said the commission is cooperating with relevant departments to prevent illegal floating of such shares.

"We are setting up a real-time monitoring system, together with the China Securities Regulatory Commission (CSRC) and the China Securities Depository and Clearing Corporation, to supervise such floating," he said.

In late June, the SASAC and the CSRC released a regulation that now requires regulator approval of large-scale sales of State-owned shares before they can be traded on the market.

Li also addressed the controversial issue of high salaries at State enterprises, Li said growth of such managerial wages for the 2004-2006 period was less than 15 percent - lower than the 36.7 percent profit their enterprises had created.

The controversy was triggered by reports that Ma Mingzhe, chairman of Ping An, the nation's second largest insurer, was found last year to have collected over 45 million yuan for his annual salary before taxes. The pay was roughly 3,200 times greater than the per capita disposable income of China's urban residents last year.

The country's financial enterprises, including banking and insurance, do not fall under the responsibility of the SASAC.

Li also revealed the SASAC is setting up a new arm that will look after State enterprise revenues.