Workers pour molten metal into a mold to make tin ingots at a factory run by CNMC (Guangxi) PGMA Co, a subsidiary of China Nonferrous Metal Mining (Group) Co (CNMC), one of more than 120 SOEs administered by the central government. Photo: CFP

China will raise the ratio of profits handed over by State-owned enterprises (SOEs) to the government from this year, the Ministry of Finance said Tuesday, in a new move to revamp the country's SOE sector.

More than 120 SOEs administered by the central government will pay 5 percentage points more of their profits to the government this year, the ministry said in a statement. 

The plan will divide these central government-administered SOEs into five categories, which will pay between zero and 25 percent of after-tax profits as a dividend to the government after the raise, it said.

China National Tobacco Corporation is the only company that will be required to turn over 25 percent of its profits to the State this year.

A total of 14 companies, including energy companies such as China Petrochemical Corporation and telecom carriers such as China Mobile, will need to hand in 20 percent of their profits.

Railway-related companies such as China Railway Engineering Corporation and resources companies such as Aluminum Corporation of China are among 70 companies that will pay 15 percent.  

More than 30 firms, including nuclear energy and culture companies, will pay 10 percent.

China Grain Reserves Corporation, China National Cotton Reserves Corporation and smaller central government-administered SOEs will not be required to make a dividend payout to the State.

The profits handed over will be used to improve people's lives, the statement said.

"The increase of the dividend payment ratio will have a certain impact on us. But since the total dividend payment is not large, the impact will not be that big," Lü Dapeng, a spokesperson for China Petrochemical Corporation, told the Global Times Tuesday.

"The plan will help improve the relations between central government-administered SOEs and ordinary people and put pressure on SOEs at local levels to turn over more profits to the government," Liang Jun, a research fellow at Guangdong Academy of Social Sciences, told the Global Times Tuesday.    

"The list should be expanded to include more SOEs such as banks and financial institutions," Liang said.

Chinese SOEs have long been accused of reaping huge profits by taking advantage of their dominant positions in key sectors such as energy, railways, telecommunications and banking.

China launched a pilot program for dividend payments by central government-administered SOEs in 2007.

At that time, these SOEs were divided into three categories, with resources companies in the first category required to pay 10 percent of their profits.

Ordinary competitive companies in the second category paid 5 percent while military enterprises and companies attached to research institutes were exempted from dividend payments.

"It's a form of progress for the ministry to collect different ratios of dividend payments. In order to be truly fair, it should also raise taxes for companies in State-dominated sectors including tobacco and energy companies, which are closed to private investors," Zhou Fangsheng, vice director of the China Enterprise Reform & Development Society, told the Global Times Tuesday.

"But the fundamental solution for breaking State monopolies is to speed up mixed-ownership reform, along with introducing non-State capital into SOEs and ensuring they operate in a truly market-based way," Zhou said. 

The Third Plenary Session of the 18th Communist Party of China Central Committee held in November 2013 pledged to develop a mixed-ownership economy, involving State capital, collectively owned capital and non-public capital.

The plenum also said China would raise the SOE dividend payout ratio up to 30 percent by 2020.