BEIJING (Reuters) - Total profit from China's central government-owned firms accelerated in the first quarter while debt levels fell from the beginning of the year, suggesting Beijing is having some success with revamping its debt-ridden and lumbering state sector.
Profit in the first quarter rose 20.9 percent from a year earlier to 377.06 billion yuan ($60.03 billion), up from 15.2 percent for 2017 - the highest in five years, the country's state assets regulator said on Monday.
The strong profit numbers could give Beijing leeway to push forward corporate deleveraging reforms as it aims to make state-owned enterprises (SOEs) more profitable and responsive to the market.
Indeed, the average debt-to-assets ratio was at 65.9 percent at end-March, 0.4 percentage point lower compared with the beginning of this year, Peng said.
SASAC said in January that China would cut the debt-to-asset ratio of central government-run enterprises' by another 2 percentage points by the end of 2020.
The regulator encourages centrally-owned firms to list their traditional assets or introduce private capital into their traditional businesses and invest the money raised to forward-looking and strategic industries, Peng said.
SASAC will also increase efforts to clean up non-performing assets and strictly control high-risk businesses, including monitoring firms' debt investments and their global businesses, Peng added.
Overseas investments by centrally-owned SOEs account for 60 percent of China's non-financial outbound investments, Peng said.
China has already cut the number of enterprises administered by the central government to 98 from 117 in 2012 through a series of high-profile mergers and acquisitions.
The regulator will complete coal overcapacity cuts and firmly deal with "zombie firms," Peng said.
He added that centrally-owned firms have cut 16 million tonnes of steel capacity and 62 million tonnes of coal capacity so far.
($1 = 6.2811 Chinese yuan)
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