The country¡¯s State-owned enterprises (SOEs) will probably begin to pay dividends to the government beginning next year, the State assets watchdog said in comments published Friday.

Li Rongrong, head of the State-Owned Assets Supervision and Administration Commission (SASAC), was cited by the Caijing magazine as saying that the payouts will be applied towards public works projects and the development of some industries.

¡°Chinese SOEs so far have not paid any dividends because they have had their own difficulties in the past, meaning we had to let them keep the profits for their own development,¡± the magazine's website cited Li as saying at a conference in Singapore.

¡°From the beginning of next year, dividends should be required.¡±

The World Bank has urged China to require State firms to pay dividends to reduce their abundant investment capital, which is feeding overcapacity in some sectors that authorities fear could lead to a fresh crop of bad loans.

The finance ministry and SASAC have reached a basic consensus on the issue, but still had to work out details including the proportion of profits to be paid out and how they would be used, Li said.

The agency has already issued a circular on the proposal and is seeking input from other government departments, the magazine said.

The magazine added that in addition to traditional State firms, those companies and financial institutions that have already received capital injections from Central Huijin, the investment arm of the Central Government, will also be required to pay the dividends.

The government¡¯s recapitalizations of Bank of China, China Construction Bank, and Industrial and Commercial Bank of China were all carried out through Central Huijin.

Li added that China welcomes foreign participation in the reform of its State firms, and that his agency was ¡°carefully¡± working out plans for allowing State firms to offer incentives to their management as they become more market orientated.

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