Chinese SOEs maintain rapid profit growth

[TaiShang]

Shares in SOEs to help support pension system
China Daily, November 20, 2017

China has announced a pilot program to help pension schemes meet growing pressure from an aging society by transferring shares of state-owned enterprises to social security funds.

A document released by the State Council said the program would begin this year with shares of up to seven SOEs to be transferred.

The plan is intended to help make up for shortfalls in the nation’s pension schemes and will be expanded in 2018 to involve more SOEs, the document said.

The move will ensure the sustainable development of the country’s basic pension insurance system, while also diversifying the capital structure of SOEs as part of an ongoing reform to improve efficiency, the Ministry of Finance said in an online statement.

The program will only involve a small number of listed SOEs, with the majority being non-listed central and local SOE equity, the ministry said.

The assets will be transferred to the National Council for Social Security Fund and wholly state-owned firms, the State Council said. The initial transfer ratio will be 10 percent of the state-owned equity.

Under certain circumstances, the NCSSF can set up a pension fund management company to independently operate the transferred assets.

The recipients can earn dividends from SOE shares and have the right to disposal, but will not be involved in the management decisions of the companies, the document said.

The recipients will, in principle, be subject to a three-year lock-up period before they can sell the transferred shares.

The transfer program will cut the burden of the working generation by expanding the pension fund scale without raising taxes or pension contribution rates, the finance ministry said.

It said the program is not aimed at selling off state-owned assets to meet pension obligation. Rather, it is a long-term mechanism that supplements social security funds and optimizes the structure of state-owned capital.

China has more than 200 million people over the age of 60 and the country faces a severe challenge in meeting its pension obligations.

The problem has become acute in certain regions, such as the northeast industrial belt, home to many elderly former workers at now struggling SOEs.

Pensions are traditionally held by banks or used to purchase treasury bills. They are now allowed to be invested in a variety of financial products, including bonds and stocks.

Since the end of 2016, seven provincial-level regions have entrusted their pensions to the NCSSF.

The State Council said its plan would help foster a more sustainable pension system and promote reform of SOEs.

“Over the course of economic development and the aging of the population, the pressure on basic pension payments has continuously increased,” it said.

According to China International Capital Corp estimates, a 6 percent transfer rate of SOE shares to social security funds would result in a 1-percentage-point reduction to basic pension contribution rates for companies.

That will lower corporate costs, and also foster healthy growth of the capital market as social security funds become a large and long-term institutional investor in the market.

http://www.china.org.cn/business/2017-11/20/content_41915204.htm

 

[sinait]

I know that. You're missing my point.

I'm referring to the character 门 ONLY, because everywhere on the Internet I see the 写法 is different. I'm not sure whether I'm the only one. And apparently only on my Google Chrome.



Your character 门 is probably working just as fine so you don't understand what I meant. Allow me to explain.

I just asked my friend and he also had the same problem. It appears as the following.

It seems like our system got mixed up with Japanese Kanji, and that's not even a proper word in Japanese. It's only written for simplification of the traditional character 門 and is not officially recognized.

门 looks OK on my Google Chrome on Android.
I use only Firefox, Opera, no Chrome for me.
.

 

[Han Patriot]

I know that. You're missing my point.

I'm referring to the character 门 ONLY, because everywhere on the Internet I see the 写法 is different. I'm not sure whether I'm the only one. And apparently only on my Google Chrome.



Your character 门 is probably working just as fine so you don't understand what I meant. Allow me to explain.

I just asked my friend and he also had the same problem. It appears as the following.

It seems like our system got mixed up with Japanese Kanji, and that's not even a proper word in Japanese. It's only written for simplification of the traditional character 門 and is not officially recognized.

https://en.m.wiktionary.org/wiki/门

OKKK....So are you Chinese btw?

 

[Mista]

OKKK....So are you Chinese btw?

Yep. You're in Singapore right? Other races usually learn their own mother tongue.

 

[Edison Chen]

The Private sector only cares about profit maximisation. They don't care about social costs/benefits unless they are forced to pay for it, or when they can use it for advertising purposes (when charity is done by private companies it is used as a form of advertising).

There needs to be a balance between the Private sector and the Public sector. Especially when it comes to merit goods like education, or demerit goods like tobacco and gambling. Or negative externalities like pollution.

For example, in China, your mobile phones can access to signal connection at a very fast speed even in remote areas and rural village (even some mountainous areas), but not even ever think about it in the United States, because AT&T or T-Mobile are private entities, which means their priority is profit making, thus they wouldn't be likely to launch any signal base station in remote areas where very few residence can be seen.

holy, if they include financial companies, the number will be exploding!
Maybe it's just good we just look at the tangible industries from CRRC to Gree.

Industrial corporations and financial institutions (mainly state-owned banks and 12 major commercial banks) co-move together anyway, as clients, if their revenues grow, their net income will grow too, so they can repay the loans to the banks. So the banks will make profits too.

SOEs might very possibly be one of few things that makes China so different from the rest of world.

SOEs are the extentions of the power of CCP.

The best strategy is privatize unprofitable and non strategic sectors and retain strategic cash cows. And then introduce some private competition to balance it up. That is exactly what China is doing...creating competitive SOEs, the best model is the Singaporean SOEs.

In the future, some SOEs will have more public services nature, to serve the welfare of Chinese people, some other SOEs will keep the path of revolution and speed up R&D expenditure to elevate core-competitiveness in the world.

To be honest, I respect those private companies who strive to make profits by providing good product and services to the society, like BATs, Xiaomi and Vivo. Especially Ali, they provide a platform which can integrate all the off-line resources (buyers, sellers, and brokers) together, to establish a trading system by creating online business transaction opportunities for all the parties. Since some factories are being closed off-line, the equipments are not used for long time, but online orders could make their engine start again, they can get orders due to the revolution of trade. So the economy is more efficient.

In the meantime, China lacks the spirit of entrepreneur...quite a lot private owners just want money and flee away, like JIA YUETING. You cannot rely on them to undertake national projects, but you need their creative thinking.