Caixin
Oct 24, 2019 06:01 AM
FINANCE

China Reports $67 Trillion Book of State Assets

Chinese governments managed $30 trillion of nonfinancial assets, plus $37 trillion of financial enterprises. Photo: VCG
Chinese governments managed $30 trillion of nonfinancial assets, plus $37 trillion of financial enterprises. Photo: VCG

How large are the assets on the books of Chinese government? The total at the end of last year came to 474.7 trillion yuan ($67 trillion), equivalent to almost 80% of global GDP for 2018.

That’s according to a report submitted by the State Council to the national legislature Wednesday. It was the second annual report on the condition of state assets to the Standing Committee of the National People's Congress. China’s cabinet made the first such accounting last year as the government pledged to improve transparency on state asset management.

State assets generated healthy returns, according to the report. Assets of China’s nonfinancial state-owned enterprises (SOEs) grew 14.7% from a year earlier to 210.4 trillion yuan as of the end of 2018. State-owned financial enterprises’ assets gained 9.7% to 264.3 trillion yuan, according to the cabinet report.

Nonfinancial SOEs also held total capital investment interests worth 58.7 trillion yuan, up 16.7% year-on-year. That included 42 trillion yuan of capital investment interests held by local authorities and 16.7 trillion yuan held by the central government.

Total liabilities of nonfinancial SOEs rose 13.9% to 135 trillion yuan at the end of last year, according to the report.

SOEs administrated by local governments reported asset growth of more than 20% in 2018 to a total of 129.6 trillion yuan, with liabilities of 80.3 trillion yuan, or 62% of assets. The liabilities-to-asset ratio of local SOEs remained nearly unchanged from a year earlier.

SOEs under central government control had a liabilities-to-assets ratio of 67.7%, down 0.4 of a percentage point from 2017.

By the end of 2018, state-owned financial enterprises had total liabilities of 237.8 trillion yuan, giving the government holdings a liabilities-to-assets ratio of nearly 90%, slightly lower than in the previous year. Net assets of state financial institutions grew 6.2% to 17.2 trillion yuan.

The report also includes for the first time financial details on the administrative and public institutions under state control, a massive sector with net assets of 23.6 trillion yuan. Assets of such institutions rose 15.1% from a year earlier.

Among China’s nearly 960 million hectares of territory, land under state control totaled 505.5 million hectares, according to the report.

The government has stepped up efforts to control major risks in state sectors, the report said. A negative list system was strictly implemented to manage nonfinancial SOEs’ investment activities to reduce debt risk. Measures to further regulate state financial enterprises also worked to improve capital conditions and risk resilience, the report said.

China will push forward reforms in SOEs to speed up production upgrades and further reduce leverage. The state will encourage companies to test internal incentive mechanisms to increase efficiency and continue efforts to expand mixed-ownership restructuring to diversify ownership, the report said.

The cabinet also pledged to further reform the approach of state asset supervision and to set up a regulatory framework for financial capital management to improve the governance of financial infrastructures.

Contact reporter Han Wei (weihan@caixin.com)

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