(Yicai Global) Feb. 26 -- Companies that are directly controlled by China's central government have managed to pay all pending salaries to migrant workers in the course of three months as well as reduce their levels of debt, which may help in buoying privately owned lenders' balance sheets.
Companies paid CNY820 million (USD122.5 million) in delayed wages to workers at the end of January, as well as CNY83.9 billion (USD12.5 billion), or 75 percent of all overdue debts to private companies, the cabinet said in a press conference yesterday. The unpaid part of salaries is a fraction of the CNY250 billion that SOEs pay to their employees each year.
The SASAC pledges these companies to repay their liabilities by the end of June. It will also guide the central government to establish a long-term mechanism to prevent such defaults in the future.
President Xi Jinping called for a solution to the problem of "triangular debt" which involves a situation where some government departments and large SOEs exploit their dominant positions to borrow from privately owned companies, while speaking at a symposium last November.
The contract amount that state-owned firms needed to pay to privately owned companies was over CNY1 trillion (USD149.4 billion) last year and it involved nearly 7 million deals, said Wu Hongbing, the head of financial supervision bureau under the State-owned Assets Supervision and Administration Commission of the State Council.
Editor: Emmi Laine