- POSTED: 06 May 2014 19:01
China has increased the dividends that state firms must pay to the government by five percentage points, it said Tuesday, implementing an economic reform originally unveiled last November.
SHANGHAI: China has increased the dividends that state firms must pay to the government by five percentage points, it said Tuesday, implementing an economic reform originally unveiled last November.
Most state-owned enterprises will now pay between 10 and 25 per cent of their profits in dividends -- the portion of a company's earnings distributed to shareholders -- the Ministry of Finance said in a statement posted Tuesday but dated April 17.
China has more than a hundred key state companies administered directly by the central government.
The government will use the additional funds to "improve the livelihoods" of people, the finance ministry said, without giving further details.
The move was announced in November with a package of policies aimed at loosening authorities' grip on the world's second largest economy, unveiled after a key Communist Party meeting known as the Third Plenum.
The document released at the end of the plenum said the government will by 2020 require 30 per cent of earnings from "state capital" to be paid back to the public coffers and used for social security.
Some state firms are exempt from paying dividends, Tuesday's statement added, including the companies managing China's grain and cotton reserves.
Although China has made the state sector far leaner since the late 1990s, government-backed companies still dominate large sectors of the economy such as energy and telecommunications.
A crackdown on official corruption launched by Chinese President Xi Jinping has caught some senior state company managers in the net.
Several officials from the country's largest oil producer China National Petroleum Corp and its listed arm PetroChina are reportedly under investigation for graft.
China last month announced the removal of the head of conglomerate China Resources, Song Lin, for suspected violations of discipline and law, state media reported, using terms which typically refer to corruption.