State energy, telecommunications and tobacco companies will be
paying the highest portion of their profit as dividend to the
central government from next year, reflecting their monopoly
status.
Twelve energy firms, including China National Petroleum Corp and
State Grid Corp of China, five telecom operators led by China
Mobile Communications Corp, and the China National Tobacco Corp are
in the first category which has to pay 10 percent of their net
profit, the State-owned Assets Supervision and Administration
Commission said yesterday.
China plans to start collecting dividends from the 150-plus
state firms under the central government's direct control starting
next year, with the money used to finance the nation's strategic
planning and for social security purposes, the State Council, or
China's Cabinet, has said.
Another 99 large state-owned enterprises directly controlled by
the central government, including metal producers and air carriers,
which come into the second category, will pay five percent of their
profit, according to the SASAC.
The remaining 34 major state-owned companies will either start
paying the dividend in three years' time or not have to pay it at
all.
China once collected such dividends from SOEs before halting the
move in 1994 as part of efforts to help financially troubled firms
use profits for their own growth.
But the government revised its thinking last year as state firms
posted strong earnings amid the nation's rapid economic
expansion.
PetroChina Co, for example, the most profitable listed company
in Asia and a unit of CNPC, saw net income rise to 81.83 billion
yuan (US$11.1 billion) in the first half of this year, on the back
of its central role in supplying energy to the world's
fastest-growing major economy.
"In the long run, such state dividend collection would surely
add pressure to earnings in listed state firms such as PetroChina,"
said Gu Jingdong, an analyst at Tebon Securities. "It's not strange
that energy and telecom firms are subject to higher dividend as
competition is less in their sectors."
Experts have also suggested that dividends should be collected
to divert excess capital from investment. The World Bank has argued
that China's state-owned companies, with no need for dividend
payouts, usually reinvest their profit inefficiently.
The SASAC said yesterday that the SOEs will pay dividends on
their 2006 earnings at half the required ratio in a pilot
stage.
The SOEs under direct control of the central government had a
combined profit of 754.7 billion yuan (US$102.4 billion) in 2006,
up 18.2 percent from a year earlier.
(Shanghai Daily December 18, 2007)
