China orders state firms to pay higher dividends

BEIJING (BestGrowthStock) – China will increase the dividends paid by state-owned firms to as high as 15 percent, the finance ministry said on Thursday, a move that will harness a bigger share of their profits for government spending on everything from education to the military.

In a statement on its website, the ministry said it was mainly firms in the resource, power and tobacco sectors that would pay the highest dividends at 15 percent of their after-tax profits, up from 10 percent now.

These companies include PetroChina, China National Offshore Oil Corp (CNOOC), Sinopec Corp, China National Tobacco Corp and mobile operator China Unicom.

Companies that fall into the next dividend bracket of 10 percent include most steel makers such as Baosteel and airlines including Air China.

Firms with the smallest dividend burden — at 5 percent — include weapon and heavy machinery makers such as China National Nuclear Corp and China Aerospace Science Industry Corp.

Until now, most Chinese state firms have paid 5 percent dividends. The increased rates, which have been approved by the State Council, or cabinet, will start from next year.

The ministry said only two firms need not pay any dividends: China Grains Reserves Corp and China Cotton Reserves Corp.

Many development organizations including the World Bank have called on China’s government to increase its share of state-owned firms’ profits so as to plough the money into social spending.

(Reporting by Koh Gui Qing; Editing by Simon Rabinovitch)

China orders state firms to pay higher dividends