Central state-owned enterprises' "money bags" tighten: The profit remittance ratio for key enterprises such as tobacco, oil, and telecommunications has been raised to a maximum of 35%

This newspaper (chinatimes.net.cn) reporter Liu Yuru Xu Yunchian Beijing report

Twelve years later, the proportion of profits remitted by central state-owned enterprises is seeing a key adjustment.

Recently, the Ministry of Finance released the “2026 Central Government Budget” and related supporting documents, as well as the “Explanatory Notes on the 2026 Central State-Owned Capital Operation Budget” (hereinafter the “2026 Budget Explanatory Notes”), disclosing that the remittance proportion of after-tax profits of centrally owned wholly state-owned non-financial enterprises has undergone the strongest adjustment in recent years.

The “2026 Budget Explanatory Notes” make it clear that starting in 2026, central SOEs in resource-based and core monopolistic sectors such as tobacco, oil and petrochemicals, power, telecommunications, and coal will uniformly remit after-tax profits at a rate of 35%, a significant increase of 10 percentage points from the highest tier of 25% implemented in 2025. At the same time, the remittance tiers have been reduced from the previous five tiers to four, with clearer classification and more explicit guidance.

This is not only a technical adjustment in fiscal revenues and expenditures, but also a deep restructuring of the mechanism for distributing state-owned capital returns under multiple pressures and circumstances, including tight fiscal balance, greater pressure on people’s livelihood protection, and rising needs for national strategic investment. From “prioritizing enterprise accumulation” to “balancing broad sharing by the whole public with strategic support,” China’s state-owned asset administration and fiscal coordination capabilities are entering a critical upgrade.

Precision focus on core industries

The most eye-catching change in this adjustment is that the top-tier percentage is increased by 10 percentage points at once, and that national economy pillar industries such as oil, power, telecommunications, and coal are brought into the highest remittance tier, with execution standards unified with tobacco enterprises.

According to the “2026 Budget Explanatory Notes,” the budgeted revenue from central state-owned capital operations for 2026 is 371.63B yuan, down 18.64B yuan from the previous year’s actual execution, a decline of 4.8%. Profit revenue is 352.23B yuan, down 22.84B yuan, a decline of 6.1%.

Of these, the collection ratio of after-tax profits of centrally owned wholly state-owned non-financial enterprises is mainly divided into four categories for execution: the first category includes tobacco enterprises and resource-based enterprises such as oil and petrochemicals, power, telecommunications, and coal, with a collection ratio of 35%. In 2026, the remittance income is 270.6 billion yuan, down 5.4%; the second category includes general competitive enterprises such as non-ferrous and ferrous metals mining and extraction, transportation, electronics, trading, and construction, with a collection ratio of 30%. In 2026, the remittance income is 63.32B yuan, down 7.8%; the third category includes defense industry enterprises, restructured research institutes, China Post Group Co., Ltd., China State Railway Group Co., Ltd., Beidahuang Nongken Group Co., Ltd., central cultural enterprises, and enterprises under central departments, with a collection ratio of 20%. In 2026, the remittance income is 17.86B yuan, down 9.8%; the fourth category is policy-based enterprises, which are exempt from remitting state-owned capital returns. For state-owned wholly owned enterprises that meet the standards for small and micro enterprises, if their profit payable is less than 100k yuan, the exemption policy is to be applied as a reference. In addition, for financial enterprises, profit revenue is 1 billion yuan.

By comparing the five-tier system implemented in 2025, it is clear that: in the past, the highest tier of 25% only covered tobacco, while resource-based industries were at 20%. In 2026, not only is the proportion substantially raised, but core sectors related to the national economy and people’s livelihoods—such as energy and communications and power—are also included in the scope for top-tier collection.

Looking back at history, since China’s state-owned capital return collection system was resumed and established in 2007, it has gone through multiple rounds of improvement: resource-based enterprises only remitted 10% when it started in 2008; in 2014, it was raised to five tiers, with the highest at 25%; afterward, it remained stable for many years. This one-time increase of 10 percentage points breaks the long-established rhythm of steady micro-adjustments, reflecting the firm determination of the state to strengthen overall coordination of state-owned capital returns.

“Looking at the reasons, first, fiscal growth has been weak, and there is a need to broaden fiscal revenue channels. The government has ‘four books’ for fiscal finances, and among them, the budget scale of the state-owned capital operation budget is the smallest. Its revenue mainly comes from dividends remitted by state-owned enterprises; second, in recent years, the overall profit total of central enterprises has grown slowly. In the past two or three years, its growth rate has not outpaced GDP. Under the reality of slow growth in total volume, relevant goals can only be achieved by increasing the proportion of profits remitted and the proportion transferred to the general public budget.” Wu Gangliang, a researcher at the China Association for Reform and Development of Enterprises and deputy dean of the Institute for the Development of State-Owned Enterprises at Jiangxi University of Finance and Economics, told a reporter from Huaxia Times.

From the perspective of industry impact, major enterprises such as PetroChina, Sinopec, the State Grid, and the three major telecommunications operators have stable earnings and ample cash flow, and are the main targets of this adjustment. A higher remittance proportion means these enterprises will have less profit available for independent discretion, forcing them to place greater emphasis on refined management, reducing costs and improving efficiency, and focusing on their main responsibilities and core businesses, moving away from extensive expansion and inefficient investment toward high-quality development.

Forcing reform and optimizing layout

China’s state-owned capital scale is huge. By the end of 2025, the total assets of central enterprises had already exceeded 95 trillion yuan. If we add the asset scale of local state-owned enterprises, the total assets of state-owned enterprises nationwide exceed 400 trillion yuan. In 2025, central enterprises achieved a total profit of 2.5 trillion yuan, and the total profit of state-owned enterprises nationwide exceeded 4 trillion yuan. The role of state-owned enterprises as the “ballast stone” in the national economy has been continuously consolidated and is even more prominent.

As this remittance proportion increases, for central SOEs it is both pressure and, more importantly, a mandatory catalyst to deepen reform and improve quality and efficiency. For a long time, some central SOEs have relied on resource advantages and market positions to achieve scale growth, and there has been a tendency toward high capital投入 and low effectiveness, as well as heavy expansion and light returns. This top-tier remittance will fundamentally change the logic of enterprise behavior and drive a profound transformation in development models.

At the operational level, central SOEs must strengthen cost control, optimize assets and liabilities, improve capital return rates, reduce low-efficiency and non-core assets and investments, and concentrate resources on core businesses and technological innovation.

At the governance level, the higher requirement for remitting returns will push central SOEs to improve internal control systems, standardize profit distribution, and enhance transparency, accelerating the establishment of a modern enterprise system with Chinese characteristics. The policy also clarifies that support for high-quality central SOEs will continue through methods such as injecting capital and reform-driven incentives, to achieve “balance between constraints and incentives, and unity between development and sharing.”

Wu Gangliang told this reporter that, for listed companies, in recent years, central enterprises have started to pay attention to market value management. Among them, increasing the proportion of cash dividends has become a fixed policy. From this angle, the Ministry of Finance increasing the collection proportion of state-owned capital returns will likely prompt central enterprises to require listed companies to remit more cash dividends, thereby changing the dividend distribution policies of listed companies.

Yan Yuejin, deputy director of the Shanghai E-House Real Estate Research Institute, told this reporter that, from a more macro perspective, this adjustment in expenditures sends a clear signal: not all industries should be funded; the state needs to concentrate money on the most needed and most critical areas. In short, the purpose of this adjustment is to guide state-owned capital to concentrate in important industries and key fields.

A research report from CITIC Securities pointed out that, 12 years later, the government work report has reiterated the “increase in the remittance proportion of state-owned capital returns.” Following that, the Ministry of Finance released the latest remittance proportions for state-owned capital returns, and the upward adjustment for various types of central SOEs reaches 10 to 15 percentage points, the largest adjustment in history. It is expected that this adjustment will directly drive a substantial increase in the scale of the state-owned capital operation budget by more than 100k yuan. It will effectively offset the shortfall in general public budget revenues and expenditures. At the same time, the policy will force central SOE listed companies to increase dividend payout ratios. Industries with significant budget incremental increases, such as oil and petrochemicals, power, and coal, should be重点关注. Finally, since the current adjustment focuses on central enterprises supervised by the SASAC, subsequent policies are expected to extend to financial enterprises and local SOEs. State-owned large banks and high-dividend securities may also be worth monitoring.

Responsible editor: Xu Yunchian Chief editor: Gong Peijia

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