Profits for China's biggest state-owned companies are down, highlighting the severity of the country’s economic slowdown since the 2008 global crisis. But despite weaker profits, the companies have seen gains in their wealth.
With the global economy still struggling, Chinese enterprises have found business harder to come by.
The State-owned Assets Supervision and Administration Commission says profits fell by 6.9% in the first 11 months of 2012. But that was already an improvement over the 16.4 percent decline in profit reported in the first half of the year.
These enterprises made total profits of 1.7 trillion yuan during the period.
The aggregate revenue of the SOEs during the first 11 months rose 10.3% year on year to 34.2 trillion yuan.
The profit decline can be attributed to rising costs and the unfavorable economic situation around the world, according to Li Baomin, head of the state asset regulator’s research center, but the solution lies within.
Li Baomin, Director of SASAC Research Center, said, “State-owned enterprises need to realize where their strengths are, and make specific plans to strengthen and optimize their operations."
Despite weaker profits, some say China’s state-owned enterprises are now healthier than ever as local state assets continue to restructure to keep up with the times.
Peng Huagang, SASAC Spokesperson, said, "We’ve seen a lot of restructuring of local assets and resources last year. For example, the restructuring of Shanxi’s coal industry to expand into electricity & coal chemical industry. Last year the value of state-owned assets transactions amounted to 86.6 billion."
However, the wealth of major state companies has fueled public debate.
In the first 11 months of 2012, the total assets of the SOEs reached 69 trillion yuan, up 15% year on year.
The companies receive low-cost bank loans, energy and other resources, making it hard for their nonstate and private peers to compete.
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