China’s Bloated Banking System, Auditors Find “Irregularities” at SOE’s

May 20, 2011

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Research has shown that Chinese SOE’s would not be profitable without favorable loan treatments from banks, and have been reluctant to even pay those back. It’s notable that losses at one of Vietnam’s State Owned Enterprises triggered a series of devaluations.

Even with favorable loan treatments, some of those profits are now in question :

    • China’s National Audit Office found 17 state-owned companies misreported financial measures.
    • $292.4 million were overstated
    • Among those named, mobile phone operator China Unicom, Aluminum Corp of China,  power company China Datang, China Three Gorges Corp., Sinochem Group, China Ocean Shipping (Group) Co. and Cofco Corp.
    • China Three Gorges Corp., Sinochem Group, China Ocean Shipping (Group) Co. and Cofco Corp.
    • State-owned companies contributed more than one-sixth of the government’s tax revenue last year, according to the State- owned Assets Supervision and Administration Commission.

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