The devaluation of public assets held by State-owned by enterprises has become a serious financial burden, experts have warned.

But who should bear responsibility for the massive loss of SOEs and how to set up and implement a system to prevent wrong policy-making remains a problem.

However, CPPCC member Chen Shouyi believes he has an answer.

He wants to establish and improve the supervision and control system on the writeoffs of non-performing State assets and quickly.

Statistics from the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), China's SOE regulatory body, indicated that the write-off loss of SOEs belonging to the central government topped 317.8 billion yuan (US$38.3 billion) last year.

The figure is 4.2 per cent of the total value of the assets owned by the 181 major SOEs. Among these, 40 enterprises suffered from a loss of more than 10 per cent of their gross assets and another 40 suffered 20 per cent, it said.

"The Ministry of Finance also wrote off about 100 billion yuan (US$12 billion) of State assets after examination," Chen noted.

Economic experts said the write-offs of non-performing State assets was aimed at shaking off the burden on enterprises and banks, and to pave the way to reform and reconstruction.

But the loss transferred by the SOEs is paid out of public funds.

In China, there are nearly 90,000 State companies and State assets of about 10 trillion yuan (US$1.2 trillion), of which at least 300-400 million yuan (US$36.2-48.3 million) need to be reorganized, according to statistics from relevant agencies.

"Meanwhile, the four major commercial banks in China have written off 2 trillion yuan (US$241 billion) of assets during the past years," Chen said.

Analyzing the reasons for the huge losses, SASAC officials blamed the lack of internal control mechanism in the SOEs as well the weak supervision from outside.

The poor co-ordination between procurement, manufacture, sales and marketing analysis always led to the loss of assets in SOEs, officials said.

Mistakes in policy-making of investment and nonstandard accounting also resulted in non-performing investment and potential financial losses.

Drawing lessons from foreign countries, adviser Chen suggested the government sets up a "responsibility pursuit system without time limitation" to penalize those who made mistakes that cause great losses.

Source: China Daily