BEIJING, March 2 (Reuters) – China’s state-owned enterprises must strengthen their management of investments in sectors such as property, finance, overseas mergers and acquisitions, and projects in high-risk nations and areas, the country’s state assets regulator said.
SOEs must strictly control the direction and scale of investments in non-core businesses, said Weng Jieming, deputy director at China’s State-owned Assets Supervision and Administration Commission.
Taking on debt beyond their ability to repay in order to invest is strictly prohibited, Chinese financial news outlet Yicai cited Weng as saying on Tuesday at an SOE meeting.
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China is cracking the whip on risky investments, indebtedness, and weak management among state-controlled entities as part of long-term financial reforms.
Last month, China’s top anti-graft watchdog identified a host of problems such as inadequate financial supervision, after a months-long inspection of 25 institutions including stock exchanges and commercial lenders. read more
SOEs must not blindly invest in sectors that have a weak foundation or lack a competitive edge, Weng warned.
The calls to crack down on risk come as China’s political apparatus gears up for a once-in-five-years congress of the ruling Communist Party in late 2022, when President Xi Jinping is widely expected to secure a third term as leader.
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Reporting by Ryan Woo; Editing by Kim Coghill
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