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China announced yesterday that its leading 169 State-owned enterprises (SOE) contributed to a solid overall 2005 performance, despite a handful still experiencing losses.

These SOEs, which are all under central authorities, claimed a combined 628 billion yuan (US$77.5 billion) profit in 2005, a 27.9 per cent rise compared to last year.

The main reason for the profit increase was attributed to ongoing SOE reform.

This included more supervision to increase the value of State-owned assets, enhancing management, and improving corporate governance, said Li Rongrong, director of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council.

The total net assets of the 169 SOEs reached 4.6 trillion yuan (US$ 568 billion) last year, an increase of 18.1 per cent from 2004. Meanwhile, total assets saw a 15 per cent rise in 2005.

Despite the overall success, more than 10 per cent of the 169 companies were in the red from January to November due to increasing cost of sales and poor risk management, according to SASAC statistics.

Many SOEs have undergone restructuring, including closing down non-performing factories or branches, introducing strategic investment, and successful merger with other partners, leading the firms to strong strength and high competitiveness.

Li said several SOEs have offloaded duties to establish schools and hospitals for their employees, which was a standard before the country started SOEs reforms in 2003. Now that companies do not have to run extra enterprises, they are less burdened.

SASAC, an authority established by the State Council in 2003 to supervise the preservation and increment of the value of State-owned assets, acts as an investor and guide for the SOEs.

The administration, Li said, will attempt to do a better job in 2006, including strengthening its supervision on SOEs, perfecting the examination system of management and the criteria of payment to employees, and speeding up closures of bad-performing companies.

China has 169 major SOEs that are under central authorities, and 2,500 other large SOEs throughout the country. All the SOEs are undergoing reform to establish a modern enterprising system in order to catch up to global standards.

During the first 11 months of last year, the 169 SOEs paid 493.14 billion yuan (US$61.1 billion) in taxes, a year-on-year increase of 24.4 per cent, the SASAC said earlier.