BEIJING, April 9 (Xinhua) -- The Ministry of Finance
on Thursday ordered state-owned financial institutions to impose a cap for top
executives as part of the country's efforts to narrow gap between the rich and
the poor.
The new rule said that pay, including salary, bonus,
and social insurance, for executives in 2008 should be no more than 90 percent
of the level in 2007.
"It is a big step for China to strengthen supervision
and monitoring on its enterprise, and the state-owned enterprises (SOEs) was of
no exception," said Tang Min, deputy secretary general of the China Development
Research Foundation.
SOEs have been the backbone of China's economic
development for years. However, they are now increasingly under public scrutiny,
and high salaries are one of the gripes the public moans about.
In February, Guotai Jun'an Securities, a brokerage
with the government holding a majority stake, bowed to public pressure by
disclosing its executives' pay in attempts to prove they were not overpaid.
The pay for a director on the board was 830,000 yuan
(about 121,522 U.S. dollars) last year while executives above assistant
president level received 570,000 yuan per person on average.
Although the company said the high salary level was
the result of a different accounting rule, and the real salary of executive
management was not as much as it "appeared", the public was still not persuaded
and they continued to complain.
"It is understandable that profitable state-owned
financial enterprises pay high salaries to management, but the payment should in
line with executive performance," said Yang Zhiyong, a researcher with the
Chinese Academy of Social Sciences, a government think tank.
"However, many executives in SOEs are overpaid, and
the salary cannot reflect their contribution to the company or society," he
added. "There is a lack of strict supervision and standardization from the
government."
In a bid to meet public complaints and standardize
salaries of SOE executive management, the country introduced a draft law on
salary management at SOEs, which said the maximum salary before tax should not
exceed 2.8 million yuan.
In response to the regulation, a number of
state-owned manufacturers including the Aluminum Corporation of China, Wuhan
Steel and Iron Corp. and China Eastern have announced their plans since last
November to slash executive pay by 15 to 20 percent.
Sany Heavy Industry Ltd. Co., a company that makes
heavy machinery, said in an announcement earlier this year that the board
chairman agreed voluntarily to get one yuan payment.
Yi Xianrong, a finance researcher from the Chinese
Academy of Social Sciences, praised the government's move as well as some
companies' gesture to standardize salary, saying this will be helpful to reduce
the gap between the rich and the poor.
Meanwhile, the country has been investigating some
other "invisible income" in addition to the "visible salary", in a bid to
further limit expenditure of SOEs and prevent corruption.
The so-called "invisible income" is transportation
fees, communication fees, and other material benefits that SOE officials enjoyed
privately but did not pay for.
Very frequently, some SOE officials take advantage of
their job and occupy public facilities and resources without paying.
Sources from China Business News said on Thursday
that the government has launched an investigation on "job-relevant income" of
SOEs nationwide, as part of its efforts to root out corruption and standardize
income of SOEs.
On February, the Ministry of Finance issued a
circular on salary control of SOE senior management, saying state-owned
enterprises should take substantial measures to control and manage" job-relevant
expenditure", and gradually avoid such expenditure in the future.
As part of the government's efforts, Chinese Premier
Wen Jiabao announced on March a crackdown on government "hospitality" budgets,
including a 15-percent cut in car-buying and fuel funds.
Wen asked the government to take the leading role in
promoting frugality and should ensure government spending goes where it is most
needed amid the economic crisis.
An Tifu, School of Finance, Renmin University of
China professor, told Xinhua it was very necessary for China to supervise and
control this expenditure, and the government should introduce more detailed and
stricter regulations.
He said: "The country provides the SOEs with many
favorable policies such as tax breaks and fund supports, and it is the SOEs'
responsibility to save public resources and respect surveillance from the
public."
Besides the supervision on "human factors", the
government is also seeking a way to support its centrally-administrative SOEs by
encouraging mergers and acquisition (M&A) between these enterprises.
China's centrally-administrative SOE will be adjusted
down to 138 enterprises from 141, according to China's state property regulator
State-owned Assets Supervision and Administration Commission (SASAC).
China Electronics Engineering Design Institute and
China National Complete Plant Import and Export Corporation will be incorporated
into State Development and Investment Corporation as its wholly-owned
subsidiaries.
China Satellite Communications Corporation will be
merged into China Aerospace Science and Technology Corporation as its
wholly-owned subsidiary.
SASAC targeted at reducing the number of
centrally-administered SOEs to 80-100 by 2010 through merger and restructuring,
compared with 196 SOEs in 2003.
Yang Zhiyong said M&A will help the country's
enterprises to better cope with the financial crisis and take part in world
competition.
Statistic showed, China's SOEs achieved a profit of
665.29 billion yuan in 2008, representing a decrease of about 30 percent year on
year.
Nineteen SOEs were on the list of the World top 500
fortunes in2008, including Sinopec, the State Grid, PetroChina, Baosteel, among
others.
BEIJING, March 24 (Xinhua) -- China's State-owned Assets
Supervision and Administration Commission (SASAC) tightened the rules Tuesday on
the conditions under which central state-owned enterprises (SOE) could use
derivatives.
In a statement, SASAC said the low risk awareness of
a few SOEs had presented a serious danger to state assets' safety. Full story
BEIJING, Feb. 9 (Xinhua) -- Guotai Jun'an
Securities, a brokerage with the government holding a majority stake, bowed to
public pressure on Monday by disclosing its executives' pay details in attempts
to prove they were not overpaid.
The pay for a director on the board was 830,000 yuan
(about 121,522 U.S. dollars) last year while executives above assistant
president level received 570,000 yuan per person on average. Full story
BEIJING, Jan. 26 (Xinhua) -- State-owned enterprises
(SOEs) and state-held companies in the financial sector should keep management
salaries at a "reasonable" level, the Ministry of Finance said in a notice
released Monday.
The notice said the goal was to avoid huge gaps
between such salaries and those of lower-level employees in such organizations,
as well as the general public. Full story
BEIJING, Oct. 14 (Xinhua) -- China's government says
state-owned enterprises (SOEs) should exercise prudence when investing in 2009
to prevent financial crisis as the global economy teeters on the brink of
collapse.
The State-owned Assets Supervision and Administration
Commission (SASAC) made the request in a circular issued late Monday. It's the
first time SOEs have been asked to be cautious about investment budgets in stock
markets and futures markets. Full story
