More profits from State-owned enterprises should serve the people

The government should spend more profit from State-owned enterprises in improving the people’s livelihoods, says an article of the China Business News. Excerpts:

The central government has raised the State-owned enterprises’ profit hand-in ratio by 5 percentage points. There are five categories of SOEs classified in light of their business fields, the ratio of which ranges from zero to 25 percent.

The central government plans to raise the ratio to about 30 percent by 2020. So this recent rise is only the first step in this direction, despite the resistance from enterprises.

The money can be used to increase medical care insurance and pensions for the people in both urban and rural areas, to help the poverty-stricken areas in western and central China, to treat serious pollution and to fund new development of areas depleted of natural resources.

The government should make the uses of the SOEs’ profits more transparent to the public and give the people the right to supervise the spending of the money.

Moreover, handing in more money to the government does not mean that SOE reform can be delayed. Some SOEs hinder the healthy development of the market. Their monopoly of certain fields thwarts the growth of private enterprises.

The investment in public welfare also brings about new business opportunities, the development of service sectors and a boost in consumption and domestic demand. The structural transformation of the Chinese economy desperately needs these positive effects. The government should not hesitate to increase its input in public welfare.