Business / Policy Watch

Dividends to increase at central State firms

By Wei Tian in Shanghai (China Daily) Updated: 2014-05-07 10:47

Payments will finance projects and services to raise living standards

China will raise the dividend payout ratio of many central State-owned enterprises starting this year by 5 percentage points to as much as 25 percent of profits, the Ministry of Finance said in a statement on Tuesday.

The policy covers 121 SOEs that are wholly controlled by the central government. They will be divided into five groups that will be subject to different requirements.

Dividends to increase at central State firms

Dividends to increase at central State firms
China National Tobacco Corp will be the only company paying the highest dividend rate of 25 percent, while 14 other State-owned companies - including oil giant China National Petroleum Corp and major telecom operator China Mobile Co Ltd, as well as major power corporations - will pay 20 percent.

Another 104 companies will pay dividends of 10 or 15 percent. The two remaining companies - China National Cotton Reserves Corp and China Grain Reserves Corp - remain exempt from dividends at present.

Plans for the increase were laid out during the Third Plenum of the 18th Central Committee of the Communist Party of China in November.

The ministry's statement said the extra funds will be mainly used for projects and services to raise living standards.

According to the ministry, SOEs on the central government level reported aggregate profits of 432 billion yuan ($69 billion) in the first quarter of this year, up 5.1 percent year-on-year. But growth slowed by more than 10 percentage points compared with the first three months of 2013.

In the first quarter, SOEs that are involved in building materials, property development, vehicles, electronics and the power sector recorded fast growth in profits. Those in the chemical, coal and textile industries reported sharp declines. Transport, steel and nonferrous metals companies had further losses.

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