Li Rongrong, Director of State-owned Assets Supervision and Administration Commission warned that problems hindering the sustainable growth of state enterprises cannot be played down. Issues like systematic barriers, irrational structures and weak creativity which still need to be addressed have all made the reform and development of state enterprises remain a tall order.

Firstly, various reasons are behind the spiraling profits of these state enterprises. A preliminary analysis on the economic performance of the state enterprises by the top state assets watchdog indicates that in the 145.45 billion yuan of new profits, 91.75 billion yuan was generated by industrial enterprises. The take-off of these industrial enterprises is driven by their expansion of scale, price surge and improvement of management. The rising domestic demand, extended production and sales increase brought 42.8 percent of their profts. 37 percent of the profits came from price hikes of industrial products especially production materials. The remaining 20.2 percent was created by better corporate governance.

Secondly, the huge profits were from a few giants. 7 enterprises, CNPC (China National Petroleum Corporation), China Mobile, Sinopec, China Telecom, China Offshore Oil, Baosteel and China Ocean Shipping Company contributed 66 percent of profits of state enterprises.

Thirdly, some state enterprises are still struggling in a difficult time for their operation. 20 of them , or 10.8 percent of the total, bled red on their books for the first 10 months of the year. Their losses reached 2.02 billion yuan.

Fourthly, some enterprises reported alarming rise of costs. 65 of them, or 34.9 percent of the total, had their year-on-year growth of costs outpaced that of their sales avenue. Inventories which drained nearly 30 percent more capital from January to October over the same period of last year increasingly damaged the liquidity of the state enterprises.

Li Rongrong gave the alert when the 186 state enterprises reported unprecedented good performance represented by a 53.2 percent profit upswing and sharp decline of bad assets over the same period of last year and the fatal speculation of China Aviation Oil (Singapore) Corp. caused enormous losses valued at about 550 million USD. Big state enterprises to sell 5.3 billion yuan of product

He vowed to strengthen risk control and crisis management next year, which seemed to be a pressing task when more and more Chinese businesses launched their ventures overseas to seek more cash cows."We must not repeat errors and get similar lessons after lessons," said Li. State assets watchdog urges state companies to control risk

Chinese Vice Premier Huang Ju Monday also made a call on Monday for faster pace of deepening reform of state owned enterprises (SOEs). He highlighted the significance of better share-holding structures, transparent and fair property rights transfer and streamlined operations.

By People's Daily Online