An increasing number of state-owned enterprises are trying to inject profitable financial service subsidiaries into money-losing, publicly listed entities – a strategy that’s raised eyebrows in Beijing as a possible setback for the government’s ongoing SOE reform efforts. Based on a Caixin analysis of state media reports and company documents, at least six companies in the steel, mining and shipbuilding industries announced plans to acquire financial assets from state-backed parents between January and July. Most of these companies have been disappointing shareholders for years by operating in the red and, more recently, coming under fire as targets of a government campaign to cut capacity in output-bloated industries. SOEs that inject financial assets into money-losing entities can rescue struggling businesses and finance downsizing initiatives.
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