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Regulation Issued to Monitor SOEs' Investment
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China has issued its first regulation to standardize the investment activities of the 166 major state-owned enterprises (SOEs) under the State-owned Assets Supervision and Administration Commission.

The regulation described the "significant responsibility" of the commission to supervise the investment activities of major SOEs as these companies, with combined assets of 10.6 trillion yuan, had a great bearing on the country's economic health and industrial safety.

Although most SOEs already conform to the standards and channel investment into their core businesses, problems such as blind investment and ineffective capital management still exist.

About 5 percent of the 1 trillion yuan invested by major SOEs in 2004 went into sideline businesses.

A source with the commission said a few companies had branched into "too many sideline businesses" and failed to make good use of their resources.

The regulation will apply only to the most frequent activities such as investment in fixed assets, property rights purchases and investment in long-term stockholder's rights. Other activities, especially complicated monetary investment, will be standardized through other regulations.

The document said the right of companies in making independent investment decisions must be respected by the supervising authorities.

The role of the commission was "not to make decisions for enterprises", but to "examine and verify their developing strategies, help sharpen their cutting edges by focusing on major business and to secure the value of state-owned assets".

It also stipulated that the commission must track the whole process of investment activity so as to identify flaws and suggest feasible improvements.

(Xinhua News Agency July 7, 2006)

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