China creates Dh192bn fund to restructure state enterprises
China has launched a 350 billion yuan (Dh192.83bn) restructuring fund as the government pushes supply-side reforms that have included mergers of inefficient state enterprises and laying off workers in struggling sectors such as coal and steel.
The China State-owned Enterprises Restructuring Fund will be managed by the state-owned Assets Supervision and Administration Commission (Sasac), the official Xinhua news agency reported on Monday.
Sasac did not immediately comment.
Ten state-owned enterprises have provided initial registered capital of 131bn yuan, the agency said. It did not spell out how the rest of the funds would be raised or how the proceeds would be used.
The Chinese fund is targeting sectors facing overcapacity, said Zhou Hao, a senior emerging markets economist at Commerzbank.
“This fund aims to facilitate the destocking and deleveraging process,” he said.
The 10 firms investing in the Chinese restructuring fund include China Mobile, China Railway Rolling Stock, China Petroleum & Chemical – known as Sinopec – and China Chengtong, a restructuring platform supervised by Sasac that will lead the fund.
China’s debt-ridden state sector, including its sprawling oil and gas industry, has struggled under a system that requires state firms to maximise economic gains while fulfilling government policy objectives.
As part of a five-year plan, the government has vowed to create innovative and globally competitive enterprises through mergers, asset swaps and management reforms.
China will reduce the number of state-owned enterprises this year to no more than 100 from 106, state media reported in July, citing Sasac deputy secretary general Peng Huagang, who added that 10 central state-owned enterprises were in talks to create five groups.
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Published: September 26, 2016 04:00 AM