Capital shortages top risk for China's SOEs, risk assessment report

BEIJING, July 28 (Xinhua) -- Lack of capital was the biggest risk facing
China's centrally-administered state-owned enterprises(SOEs), according to a
risk assessment report released by the State-owned Assets Supervision and
Management Commission (SASAC) on Monday.

A lack of capital worried most SOEs, especially those in electricity,
petroleum, steel, investment, energy and real estate, said an expert
participating in the evaluation of the report.

The expert, who declined to be named, attributed the shortage of funds to
the tightening of credit, materials price hikes and reckless expansion.

The rapid expansion of some SOEs was believed to have resulted in the
capital scarcity as the continuous tightening of monetary policies and bank
loans failed to slow acquisitions and mergers.

SASAC director Li Rongrong warned against the "strong expansion impulse",
saying investment beyond main business lines and capacities as well as
investments with very low returns must be prohibited.

SOE acquisitions and mergers were strictly controlled, and they were banned
from using bank credit to invest in securities, real estate and insurance, he
said.