Laws to prevent cheap sale of state assets

Chinese lawmakers are mulling a law to prevent state-owned assets being sold too cheaply, state press reported Sunday, legislation that is likely to tighten Beijing’s control over business.

The draft law details procedures for the restructuring of state assets, including accurate audits before firms are merged or sold, the official Xinhua news agency reported.

“The state assets should be transferred at reasonable prices,” it said.

China has moved to tighten rules involving the sale of its state-owned companies amid criticism that it has been selling off valuable state assets, especially to foreigners at firebrand prices.

Fears in China that its booming economy is sliding into the grip of powerful multinationals has prompted lawmakers to move to better control firms and industries.

Over the past two years Beijing has responded to the criticism by steadily building up stricter regulations governing key industries such as banking, insurance, stockbroking and shipbuilding. In August legislators passed the nation’s first anti-monopoly law, which requires national security checks for foreign companies seeking to merge with or take over Chinese enterprises.

Three months later China’s key economic development agency again identified sectors from real estate and financials to oil and rare metals as restricted or off limits to foreign capital.

The current draft law stipulates that the government should set up a budgetary system that would manage the expected revenues of state-owned enterprises (SOEs) in order to better ascertain their value, Xinhua reported.

Merger, restructuring and bankruptcy procedures should include consultation with China’s communist party-controlled work unions and even employees, it said.

Officials caught embezzling, transferring assets at unreasonably low prices or causing economic loss to the government will be punished, it said.

Beijing, Sunday, AFP