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Net Profits for Central Government Enterprises Continue to Decline

According to the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC), the net profits for central government enterprises amounted to 253 billion yuan (US$40 billion) for the period from January to April 2012, down 13.2 percent from the same period last year. The previous report, which was for the first quarter of 2012, suggested that the central enterprises showed an end to the growth that had occurred over the last two years and showed a decline for the first time since November of 2009.

The decline was due to a number of external factors such as an increase in the prices of energy, raw materials, and agricultural products. Other external contributors included an excess of administrative layers, poor management skills, and harsh internal competition. Some experts also indicated that the “good old days” of central enterprises were due to the 4 trillion yuan (US$633 billion) from the economic stimulus plan that followed the 2008 economic crisis. It is expected that the net profits will continue to decline in the near future.

Source: China Economy, May 19, 2012