21st Century Business Herald:

We have noticed that the overall production and business operation of central SOEs gained good momentum in the first half of this year. What are the features and highlights that are worthy of attention? What key measures will be put in place during the second half of the year that will further promote the high-quality development of central SOEs? Thank you.

Wang Hongzhi:

I would like to invite Ms. Liu to answer your questions.

Liu Shaowei:

Thank you for your interest in the production and operation of central SOEs. Since the beginning of this year, central SOEs have carried out special actions in a solid way to enhance quality and efficiency. Their economic operations have shown good development trends with stability, structure, quality and efficiency, which has effectively played a role as an anchor and ballast for the national economy. The main highlights and features can be summarized as the following, namely, "being stable in three aspects and showcasing excellence performance."

First, stable production and operation. In the first half of the year, the production and operation of central SOEs were stable and orderly, and the output of key products maintained a steady growth. For example, electricity generation and sales increased by 5.3% and 8.9% year on year, respectively, crude oil output saw a 0.9% year-on-year growth and raw coal output increased by 1.2% year on year.

Second, stable value creation. Their total profit reached 1.4 trillion yuan, an increase of 1.9% year on year. Net profit and net profit that is attributable to shareholders increased by 1.3% and 2.1% year on year, respectively, maintaining a coordinated growth with total profit.

Third, stable contributions to society. They have paid a total of 1.3 trillion yuan in taxes and fees, an increase of 0.5% year on year. The completed fixed asset investment increased by 3.3% year on year; in particular, investment in strategic emerging industries grew by 16.9% year on year and accounted for over 37% of total investments.

Their excellent performance is reflected in operating quality and efficiency. Their cumulative R&D investment reached 434 billion yuan, a year-on-year increase of 2.7%. The labor productivity on an annualized basis reached 789,000 yuan per person, a year-on-year increase of 4.6%. The revenue profit margin reached 7.4%, an increase of 0.3% year on year.

In the second half of the year, facing a complex external environment, we will focus on developing new quality productive forces and effectively advance better high-quality development of central SOEs through "three increases," "three new investments" and "three boundaries" management. "Three increases" mean that we will take the lead in increasing the production and supply of coal, electricity, oil and other important basic products, as well as transportation capacity, in a bid to ensure "increased supply;" we will make a concerted effort to enhance the efficiency of business operations, management and reform, in a bid to ensure "increased benefits;" and we will actively serve the national strategy to drive the common development of upstream and downstream industrial chains, in a bid to ensure "increased investment." "Three new investments" mainly refer to increasing investment in scientific and technological innovation and accelerating breakthroughs in technical bottlenecks in key areas; increasing investment in industrial renewal and accelerating the layout of new industries in new arenas; increasing investment in equipment renewal and accelerating the transformation and upgrading of traditional industries. The "three boundaries" management mainly refers to firmly observing financial boundaries, strictly controlling the rapid growth of debt scale while also relying on the treasury system to strengthen real-time penetration and intelligent supervision and resolutely upholding the bottom line of no major risks; stringently observing business boundaries, controlling irrelevant and excessive diversification, and concentrating superior resources to optimize main business and to strengthen the industry; strictly observing corporate boundaries, controlling the disorderly expansion of multi-layer structures, vigorously compressing management levels, reducing equity levels and the number of legal entities, and plugging management loopholes. Thank you!