SOE Dividends: How Much and to Whom?

China’s state-owned enterprises (SOEs) overseen by the central government’s StateOwned Assets Supervision and Administration Commission (SASAC) made net profits of RMB 299 billion during the first half of 2005 and RMB 400 billion in 2004. All nonfinancial SOEs, including those administered by provincial and municipal authorities, earned total profits of RMB 759 billion in 2003, representing 6.5 percent of GDP and equivalent to 35 percent of fiscal revenue. . Some large publicly-listed SOEs pay out 20-60 percent of their earnings in dividends (Table 1). Yet, for historical reasons recounted below, no government entity – neither the Ministry of Finance (MOF) nor SASAC – receives any dividends from large centrally-administered SOEs, a pattern that mostly applies as well to local governments and locally-administered SOEs. This is in contrast to arrangements in other countries, where the state, as key shareholder, normally receives dividends, like other shareholder.