Beijing Review – August 15, 2019

http://www.bjreview.com AUGUST 15, 2019 BEIJING REVIEW 37

BUSINESS

social security contributions saved com-
panies a total of 67.6 billion yuan ($9.8
billion), said You Jun, Vice Minister of Human
Resources and Social Security, at the policy
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Lu said on the same day that along with
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inces, many other provincial-level regions are
also making preparations for the transfer of
state capital such as conducting surveys and
devising implementation schemes.
“The 59 large companies selected for
state capital transfer have a sound business
performance, accounting for more than half
of the total number of centrally administered
SOEs qualified for the program,” said Wen
Zongyu, head of the Public Assets Research
Center of the Chinese Academy of Fiscal
Sciences, in an interview with 21st Century
Business Herald.

Challenges ahead

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ings from the shares they hold, which will
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for the slow progress of the reform,” Zhou
Lisha, a research fellow with the Bureau
of Research of the SASAC, told The Time
Weekly.

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“The government has recently reduced the

corporate social security contributions to

alleviate their burden. Against this backdrop,

speeding up the replenishment of the social

security funds through the injection of state

capital is the only solution to make the funds

sustainable.”

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Research Center of the State Council

Wang Jiang, a senior economist with the

SASAC Bureau of Research, said in an analy-

sis piece that according to a decision made

by the Third Plenary Session of the 18th

National Congress of the Communist Party

of China, by 2020, 30 percent of the earn-

ings of state-owned assets must be turned

over to the government. Meanwhile, 10 per-

cent of the equity in state-owned companies

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security funds. Such a distribution model

may increase the burden on SOEs.

Moreover, against the backdrop of

increasing uncertainties and economic

downward pressure this year, it is not easy

for centrally administered SOEs to reach the

profit growth target of 9 percent, and the

transfer of state capital by companies in the

industries with surplus capacity or the en-

ergy industry may be affected, Zhou noted.

“Some centrally administered SOEs are

still suffering losses. Currently, their equity

rights will not bring dividends to the social

security funds. In some cases, the equity

in some heavily indebted SOEs have been

retained by banks as pledges for loans or are

frozen by courts, making property rights un-

clear. In addition, since the mixed ownership

reform, which allows private or even foreign

investment in state-owned companies, and

the reorganization of SOEs are still underway,

the transfer of state capital into the social

security funds must be connected with such

reforms. Therefore, the program cannot be

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MOF, the total owner’s equity in all centrally

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tutions, is 27 trillion yuan ($3.9 trillion). If 10

percent of the equity is transferred to the

social security funds, the total should be 2.7

trillion yuan ($392.3 billion).

The transfer will not change the current

administrative system of state-owned assets,

according to Lu. The SSF and designated

local recipients will, as long-term financial

investors, receive earnings mainly through

stock appreciation, with no intent to inter-

fere in the daily operations of the SOEs. Q

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