Industrial SOEs post weaker profit growth

China's State-owned industrial enterprises posted a slower growth rate than their private counterparts in the first quarter of 2013, official data showed Saturday. Analysts attribute the gap to the former's rigid management structure and dependence on infrastructure.

State-owned and State-held industrial enterprises reported a 7.6 percent year-on-year profit growth for the past quarter, while private ones posted a 17.8 percent profit growth during the same period, the National Bureau of Statistics said Saturday.

"State-owned industrial enterprises' performance has been dragged down by China's economic slowdown, as their businesses are heavily related to infrastructure," Ma Yao, a macroeconomic analyst at Shenzhen-based CIC Industry Research Center, told the Global Times Saturday.

"Also, compared to private firms, State-owned enterprises (SOEs) are not so flexible in adjusting company strategies," he said.

The State-owned Assets Supervision and Administration Commission (SASAC) aims to boost the performance of the State-owned economy by setting a 10 percent profit growth target for the 115 SOEs under its administration, Jiang Jiemin, the chairman of SASAC, said at a conference held Tuesday in Beijing.

In China, there are 115 centrally administered SOEs including Sinopec and China Mobile. The rest of the SOEs are under the administration of municipalities, provinces and autonomous regions.

Last year, China's centrally administered SOEs posted year-on-year profit growth of only 2.7 percent, data from SASAC showed. But in the first quarter of this year, their profits grew by 16.5 percent from a year earlier, while local SOEs reported a 16 percent profit decrease year-on-year, according to the Ministry of Finance.

Jiang said that centrally administered SOEs have continued a revival trend since the fourth quarter of 2012, but noted that risks in certain industries still remain. He also said the commission had set up a working team to coordinate and support the development of centrally administered SOEs.

"It shouldn't be difficult for centrally administered SOEs to achieve a 10 percent profit growth this year, given their dominance in monopolized sectors such as energy and telecom, as well as advantages in securing bank loans and getting policy support," Luo Zhong­wei, a researcher at the Institute of Industrial Economics under the Chinese Academy of Social Sciences, told the Global Times Saturday.

However, SASAC's move has raised dissenting voices among some experts, who believe that SOEs' business performance should be market-determined rather than decided by the administrative order.

"SASAC's target will force SOEs to pursue high profit growth rather than implementing other urgent tasks such as industrial upgrades and technology development," Luo said, noting that the regulator needs a more complicated evaluation system for centrally administered SOEs.

"Furthermore, SASAC might roll out a batch of measures to facilitate the realization of the profit growth target, which means it would allocate more resources to SOEs and squeeze the development room available for private firms," Ma said.