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Profits at China's big state-owned industrial firms slide in 2014
[BEIJING] Profits from core operations at China's large state-owned industrial conglomerates fell a hefty 12.3 per cent in 2014, the National Bureau of Statistics said on Tuesday, adding urgency to central government plans to overhaul the country's inefficient state sector.
Last year's total profits at the biggest state industrial firms declined 5.7 per cent from a year earlier to 1.4 trillion yuan (US$224 billion) versus a 6.4 per cent rise to 1.5 trillion yuan in 2013.
Beijing is set to start publishing a series of planning documents before the end of March aimed at boosting the performance of state enterprises, which is widely expected to be the most ambitious reform of government-owned industry in nearly two decades.
Shrinking profitability at state-owned companies was "very normal and foreseeable", as companies prioritised structural reforms and upgrades, said Zhang Chunxiao, professor of economics at Peking University and adviser to the State-owned Assets Supervision and Administration Commission.
The new data will "motivate the Chinese government and state-owned enterprises to think carefully about how to step up structural reforms, upgrading traditional industries to improve their ability to survive market competition and developing emerging industries and technology innovation," Mr Zhang said.
State-owned enterprises were hit by surging operating costs, notably a 19.2 per cent jump in financing expenses from a year earlier, the Ministry of Finance said in a report last Thursday.
The Central Commission for Discipline Inspection (CCDI), the Communist Party's anti-graft authority, is targeting insider corruption at 53 strategic state firms, including China Southern Airlines Co and China Unicom, in a bid to prevent the loss of state assets during the reform process.
The CCDI has sent inspection teams into scores of government-owned conglomerates over the last two years, placing 21 executives under investigation for wrongdoing.
Profits at China's large private firms reached 2.2 trillion yuan last year, up 4.9 per cent from 2013, according to the statistics bureau, while overall China's factory profits grew at their weakest rate in two years in 2014.