China’s State-owned Assets Supervision and Administration Commission of the State Council (SASAC) recently held an internal meeting regarding the grim situation that state-owned central enterprises are facing. “Any investments involving large-scale expansion must stop,” said the person in charge on the meeting. “When the economic situation is not good, state-owned central enterprises must not only watch their own cash flow but also the flow of capital for their customers, both upstream and downstream.”
The SASAC has publicly warned central enterprises several times to get ready for “winter.” As of today, 36 central enterprises’ listed concept-class companies have publicized their 2012 reports. Out from these 36 companies, the net profits of 19 companies have decreased. This means that 52.8% of the central enterprises have shown reduced profits. In the first half of 2012, 94 out of 139 central enterprises continued to lose money or lost money for the first time, which means that 67.6% of China’s central enterprise companies are losing money. The deteriorated central enterprise companies are mainly in the manufacturing, electricity, petrochemical, transportation, and real estate industries.
Source: China Review News, August 7, 2012