SOEs seen inflating revenue
Problems exposed by auditor must be solved: expert
China’s top auditor said that 18 of 20 recently audited central State- owned enterprises ( SOEs) have inflated their revenue by a total of 200.16 billion yuan ($ 29.3 billion) and profits by 20.3 billion yuan during recent years.
Experts noted on Sunday that this exposes problems that need to be solved as part of ongoing SOE reforms.
The 20 audited central SOEs are in sectors ranging from energy, manufacturing, trade to construction, and include China National Petroleum Corp, Sinochem Group and China State Shipbuilding Corp, according to a report the National Audit Office of China released on Friday.
“In order to attract investors and keep a positive image, some firms have violated regulations and inflated their revenue,” Liu Xuezhi, a senior analyst at Bank of Communications, told the Global Times on Sunday. Liu noted that the phenomenon exists among private companies as well as SOEs.
“It’s a good thing that these problems have been exposed, as it will be helpful for speeding up the reforms,” according to Liu.
But Feng Liguo, an expert with the Beijing- based China Enterprise Confederation, expressed concerns that there might be a larger number of SOEs inflating their financial data, which would be difficult to calculate.
The audited centrally administered companies have improved their management and accelerated their upgrading during recent years to ensure stable profit growth, but problems still exist, said the report.
These companies have put domestic investments worth 60.6 billion yuan at risk due to poor decisions and management, the report explained. They also put investments overseas worth 38.5 billion yuan at risk due to their inadequate risk control, it said.
China is pushing forward its supply- side structural reforms, which encourage large companies to expand overseas. However, some of the 20 companies are pushing forward with reforms at a slow pace, according to the report.
Also, some companies exceeded the budget for buying gifts or cars for business use.
The audited companies have accept- ed all the audit suggestions and have made changes, including disciplining 309 employees.
A long road to reform
China has been making efforts to push mixed- ownership reform during recent years. By the end of 2016, mixed- ownership reform had expanded into 68.9 percent of central SOEs and their subsidiaries since the third plenary session of the 18th Communist Party of China Central Committee in 2013, according to a People’s Daily report on June 3.
A total of 1,995 reform agendas for mixed- ownership have been completed by central SOEs and their subsidiaries since 2013, said the report.
But progress has not always been smooth. For instance, private capital is still reluctant to get involved with SOEs because of concerns about getting enough say in management decisions, Feng told the Global Times on Sunday.
There are disputes over employee ownership, and how to protect State assets is still a big issue, said Feng. “There is still a long way to go,” he said.
SOEs play a vital role in China’s economy. The tax contribution by central SOEs increased in the first quarter of 2017. They paid about 530 billion yuan in taxes, up 7.5 percent year- onyear, according to data from the Stateowned Assets Supervision and Administration Commission ( SASAC).
The accumulated profits of China’s central SOEs soared 23.2 percent yearon- year in the first quarter of 2017 to 312 billion yuan, SASAC said in April. And their total revenue rose 19.2 percent to 6 trillion yuan in the same period.
“It’s a good thing that these problems have been exposed, as it will be helpful for speeding up the reforms.” Liu Xuezhi a senior analyst at Bank of Communications