2018.04.1601:37:00UTC+00China Central Government-Owned Firms’ Profits Rise in the 1st Quarter

Total profit from China's central government-owned companies increased in the first quarter as debt levels dropped from the beginning of 2018.

Profit in the first quarter grew 20.9 percent from the previous year to 377.06 billion yuan ($60.03 billion), up from 15.2 percent for 2017 - the highest in five years, according to the country's state assets regulator. For March, profit increased 17.8 percent from a year earlier to 169.87 billion yuan, the highest for a month on record, spokesman Peng Huagang said.

The strong profit numbers could provide Beijing with a leeway to push forward corporate deleveraging reforms as it aims to make state-owned enterprises (SOEs) more profitable and responsive to the market.

The average debt-to-assets ratio stood at 65.9 percent at end-March, 0.4 percentage point lower compared with the beginning of this year, Peng said.

SASAC said in January that China would reduce the debt-to-asset ratio of central government-run enterprises' by another 2 percentage points by the end of 2020.

The regulator encourages centrally-owned firms to list their traditional assets or introduce private capital into their traditional businesses and invest the money raised to forward-looking and strategic industries, Peng said.

Overseas investments by centrally-owned SOEs account for 60 percent of China's non-financial outbound investments, Peng said.

China has already reduced the number of enterprises administered by the central government to 98 from 117 in 2012 through a series of high-profile mergers and acquisitions.