Chinese SOEs refuse to transfer state-owned shares to social security funds

China's State-owned Assets Supervision and Administration Commission (SASAC) has warned it will refuse to transfer state-owned shares to social security funds so as to maintain strict state control of enterprises.

SASAC director Li Rongrong said on Tuesday that the SASAC and the state-owned enterprises (SOEs) would pay money to social security funds instead.

At the end of last year, China faced a shortfall of 800 billion yuan (100 billion U.S. dollars) for pension payments, the China Economic Weekly reported from a Ministry of Labor and Social Security document in November.

The SOEs were ordered to appropriate 10 percent of their shares issued in initial public offerings and additional offerings to social security funds in June 2001.

However, the practice was stopped four months later and resumed only by overseas-listed SOEs in June 2002.

Share transfers may cause problems in the management of the SOEs, as social security fund managers may lack the experience and dedication to perform their duties as shareholders, Ju Jinwen, researcher with the Institute of Economics of the Chinese Academy of Social Sciences, told the China Economic Times last month.

Some proposed again to use the assets of SOEs to replenish the social security funds in 2003, but there remained arguments against transferring the assets.

The SASAC fears share transfers will reduce the stake that state-owned capital, represented by the SASAC, holds in SOEs.

Meanwhile, Gao Xiqing, vice-chairman of the National Council for Social Security Funds, ruled out the possibility of cash payments, saying the fund watchdog only valued the right to sharing dividends rather than the right to manage SOEs as shareholders, according to the 21st Century Business Herald.

By the end of last year, China's social security funds totaled 201 billion yuan.

Source: Xinhua