China’s state-owned enterprises and state holding enterprises have shown robust financial performance in the first eight months of 2023, according to the Ministry of Finance. This report highlights the key findings from the Ministry’s announcement, shedding light on the significant revenue and profit growth, tax contributions, and the asset-liability ratio of these state-owned entities.
Strong revenue growth
During the first eight months of 2023, Chinese SOEs and state holding enterprises recorded a total revenue of 54.39 trillion yuan (US$7.58 trillion). This figure represents a substantial 4 percent increase compared to the same period the previous year. This impressive growth underscores the resilience and vitality of China’s state-owned sector, even in the face of challenging economic conditions globally.
Profitability on the rise
In addition to robust revenue growth, Chinese SOEs reported substantial profit gains. Profits for the first eight months of 2023 reached 3.09 trillion yuan, marking a notable increase of 4.3 percent compared to the corresponding period in the previous year. This surge in profitability indicates that these state-owned enterprises have managed to strike a balance between increasing revenue and controlling costs effectively.
Decline in taxes and fees
While revenue and profits surged, the total taxes and fees paid by Chinese SOEs during this period decreased by 3.1 percent year on year, amounting to 3.87 trillion yuan. While the decrease may seem counterintuitive, it is essential to consider that economic policies and tax incentives aimed at supporting growth and innovation may have influenced this decline. Nevertheless, these contributions remain a significant source of revenue for the government.
The Ministry of Finance also revealed that the asset-liability ratio of Chinese SOEs was 64.8 percent at the end of August. This ratio measures the proportion of assets financed through debt. A relatively stable asset-liability ratio indicates that SOEs have been prudent in managing their finances, avoiding excessive debt, and maintaining a strong financial position.