Industrial Production News
- Tight money could bankrupt State firms'
Date: 19-Dec-2007 Sources: (Xinhua Online)
THE country's State firms must carefully manage their books or face a risk of bankruptcy as the government ratchets up its economic tightening, the head of the country's State asset watchdog said yesterday.
Companies overly reliant on credit to fund their operations would be squeezed and some are already teetering on the edge of trouble, said Li Rongrong, chairman of the State-owned Assets Supervision and Administration Commission, or SASAC.
China has intensified its year-end ritual of credit tightening in the past two months, leaning heavily on banks to freeze net new lending until the end of 2007, and bankers said the clampdown looked set to continue into the new year. 'Macro tightening has just started,'Li said.
Earlier this month, the country's top leaders said a priority for 2008 would be to tighten monetary policy in order to keep the economy from overheating.
Chinese enterprises across a range of sectors have poured money into expanding production over the last few years, driving up capacity, pinching margins and forcing some to take out new loans just to pay operating costs.
China has let thousands of indebted State firms go under since the 1990s in a process of economic restructuring that has also enabled some key companies, particularly in the resources sector, to become strongly profitable.
China's State-owned enterprises administered by the Central Government reported annual profit growth of 31.7 percent in the first 11 months from a year earlier to 918.66 billion yuan (US$124.5 billion), the Xinhua news agency said yesterday.
Sponsor Results:
