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Profits stood at 1.97 trillion yuan ($321.50 billion) in the January-October period and total business revenue at SOEs grew 11 per cent to 37.70 trillion yuan during the same period.
China’s state owned enterprises lost their position as the nation’s most profitable sector last year to China COSCO Holdings Co., the country’s largest shipping company.
A slowdown in profits earlier this year was blamed on overcapacity, inefficient cost control and slow industrial upgrading by Li Jin, a senior researcher with the China Enterprise Research Institute.
“The SOEs that recorded profit declines are mainly in the traditional industries instead of high-tech or emerging industries. They rely largely on expanding investment to boost growth and are easily affected by changes in the economic cycle,” said Li.
Beijing’s backing for the state sector has been criticised by many analysts as making it unviable for private businesses to compete.
The Wall Street Journal has said China’s SOE’s are beneficiaries of unfair subsidies.
“Beijing frequently justifies the state’s grip on key companies that form the “commanding heights” of the economy – like energy, power, steel, telecoms and shipbuilding,” says a WSJ blog.
However, new reforms unveiled at the end of the Third Plenum, a key Communist Party meet, says state owned enterprises will now be exposed to more competition and less protected than in the past.
“[We will] encourage non-public firms to participate in SOE reform. [We will] allow non state-owned capital to purchase shares in projects invested by state-owned capital,” said the CPC communiqué released after the meet.