China's SOEs report big profits in 2010

Chinese media covered the difficulty in the private economy of Wenzhou this weekend, but there's no such problem for state owned enterprises.

SOEs Net Profits Hit New High

China's state-owned enterprises recorded a combined 1.07 trillion yuan in net profits, about 50 percent higher than last year's figures, according to State-owned Assets Supervision and Administration Commission (SASAC).

In the first 11 months, central government-controlled enterprises reported 802.2 billion yuan in net profits while local government-controlled enterprises registered 271.6 billion yuan in net profits, said Wang Yong, the newly-appointed director of SASAC.

Total assets and sales revenues also expanded from 2005 to 2009. Total assets of SOEs rose from 25.4 trillion yuan in 2005 to 53.5 trillion yuan in 2009 and total sales revenues went up from 14.2 trillion yuan in 2005 to 24.2 trillion yuan in 2009, according to SASAC.

Analysts say that in recent years China's state-owned companies have continued to expand due to easier access to bank loans, while private enterprises have faced a growing risk of being crowded out.

Besides the access to bank loans (which come from state-owned banks), a lot of SOEs are in basic industries: utilities, telecommunications and energy. Also, booming sectors such as autos have many state-owned firms. Chinese SOEs have generally done well in years with rising resource prices.

Still, the contrast with the private enterprises in Wenzhou is stark.