State-owned firms ignore Beijing order to exit property sector
March 10, 2013 Leave a comment
State-owned firms ignore Beijing order to exit property sector
Staff Reporter
2013-03-10
A 2010 order issued by the Chinese government requiring state-owned companies to exit the property sector if it is not their core business has failed to prevent such companies from winning bids for prime-location land across the country, reports the Guangdong-based Southern Weekly newspaper.
According to recent reports, less than a quarter of the 78 state-owned enterprises asked to terminate their property business operations more three years ago have complied.
The recent January bidding for eight plots of land for commercial use in Beijing, for example, were all won by state-owned companies, the newspaper said. Even China National Petroleum Corp and China Petrochemical Corp (Sinopec), which were praised for swiftly moving out of the property sector in 2010, have gained rights to use a plot for residential and commercial use in Beijing since last year.
The government order was issued by the State-owned Assets Supervision and Administration Commission on March 18, 2010, after three state-owned companies were named as major land owners in the country.
News of the considerable land owned by state-owned enterprises, which was reported during the sensitive time of China’s “Two Meetings” — the National People’s Congress and the Chinese People’s Political Consultative Conference — had also led to the beginning of a new round of government policies aimed at reining in high property prices at the time, the newspaper said.
Such continued involvement in the property market, along with an earlier report from national broadcaster CCTV about three Sinopec subsidiaries in southern China’s Guangdong province being named as violators or potential violators of environmental regulations, reflected the poor supervision of state-owned companies, the newspaper added.
It is difficult for local authorities to oversee state-owned companies’ operations, according to the newspaper, since many of the executives at these companies are high-ranking ministers, vice ministers and officials who control the local officials below them.
The fact that the assets supervision commission did not set a deadline for the 78 companies, which were not specifically named, to complete their exit, also made the process of public oversight challenging, the newspaper added.
State-owned companies are a major income source for the Chinese government, unlike those in other countries, which are tasked to run public services even though they are not commercially viable.
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