Chinese state company Sinopec expects to post solid loss for 2016, putting into question the need for radical reform in companies led by Beijing. It is estimated this will be the biggest financial loss in corporate history of China. The estimates are that the manufacturer will consider such by 16 billion CNY, or 2.3 billion USD.
The financial result, however, may be even more dramatic in the words of experts, it can reach or even surpass the previous record loss of 16.3 billion CNY, which registers local aluminum producer Chinalco in 2014.
It is no coincidence that the poor performance of Sinopec will again give cause for criticism of the authorities in Beijing on management of state companies.
The fact is that the worst-performing Chinese companies over the past decade are namely state-owned enterprises, including Wuhan Iron & Steel Co in 2015, COSCO China in 2011 and Eastern Airlines in 2008.
Over the past three years, Chinese authorities have introduced a number of measures to reform these companies. These include attempts to mixed ownership with the participation of private investors, merger producers operating in similar industries and include sovereign wealth groups.