Top auditor warns of economic development risks(2)

LOOSE IMPLEMENTATION

Audits of 53 central state-owned enterprises (SOEs) showed that their competitiveness has significantly sharpened, but management still needs improvement.

Their rate of return on equity has dropped from 10.9 percent in 2010 to the current 6.4 percent. The decrease can be attributed both to general economic difficulties and poor management systems, according to the report.

The registration of 21 enterprises did not follow the Company Law. Forty-five enterprises have too many inner tiers, with the highest reaching 11 levels, Liu said.

More than 1,780 key decisions made by the SOEs failed to meet standards, causing losses or potential losses worth 4.56 billion yuan (741 million U.S. dollars).

Some enterprises falsified sales volumes or costs to reach their quota or evade taxes, he added.

The audits also showed that some companies blindly invested in the polysilicon, wind power and coal chemical industries.

Forty-five projects were launched without approval. The total investment for these projects had reached 58.3 billion yuan by the end of 2011, Liu said.

Innovation also needs to be improved, as technological investment at 53 enterprises lagged behind their production development, he said.