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China gives state firms $8 bln to combat slowdown
November 27, 2008 / 2:19 AM / 9 years ago

China gives state firms $8 bln to combat slowdown

BEIJING (Reuters) - The Chinese government has approved 54.8 billion yuan ($8 billion) in aid to state-owned firms to help them ride out the global financial crisis.

The State-owned Assets Supervision and Administration Commission, which oversees more than 150 big companies, said about 49 percent of the money would be used to increase its ownership in those firms.

The rest would be spent on helping the companies to expand and restructure or to recover from a string of natural disasters that has hit China this year, including May’s Sichuan earthquake.

In a statement on its website (www.sasac.gov.cn), SASAC did not list which companies would receive funds.

China Southern Airlines (1055.HK), the country’s top carrier by fleet size, said on Wednesday that it would get a $440 million capital infusion from the government. Its peer China Eastern Airlines (600115.SS) (0670.HK) said on Thursday that its parent was also applying for a capital injection from the state.

SASAC said its purpose was to complement major changes recently in China’s macroeconomic policy changes. Its initiative will play a positive role in helping state firms overcome the impact of the global financial crisis, the agency said. It said the spending was off-budget and would be financed from dividends it had collected from state firms in the past two years. Last year, SASAC ordered state firms to make dividend payments equivalent to 5 or 10 percent of their net profits, depending on which industries they are in.

It collected about 16 billion yuan from these firms in respect of 2006 earnings, the official China Securities Journal said on Thursday. It did not give a figure for 2007.

($1=6.828 Yuan)

Reporting by Langi Chiang; Editing by Alan Wheatley

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