New measures to supervise overseas assets of centrally administered state-owned enterprises (SOEs) have been announced by the State-Owned Assets Supervision and Administration Commission (SASAC), coming about amid what it termed "increasing complexities."

The newly announced pair of regulations by the regulator of China's state-owned assets on June 27 aim to stop management loopholes and improve the safety of SOEs' overseas assets.

The Interim Regulations on the Supervision and Administration of Overseas Assets of Central SOEs concern central SOEs' overseas investment, management and various operating activities, both internal and external. The Interim Regulations on the Administration of Overseas Property Rights of SOEs regulate registration, assessment, examination and transmission of the overseas properties of central SOEs and set out requirements for the equity management of red-chip companies, mainland-based companies that are incorporated internationally and listed on the Hong Kong Stock Exchange.

The release of the two interim provisions is an important measure for SASAC to fulfill its responsibility as state-owned assets owner and is conducive to helping China's SOEs foster world-class competitive enterprises and accelerating the internationalization of their management strategies.

SASAC's new regulatory measures standardize individual equity holdings on behalf of SOEs, which used to lead to losses of assets overseas. Any transaction of equity holding that would change the holding status of SOEs must get the approval from SASAC, said the interim regulation. Those responsible for the loss of overseas assets and mismanagement will be held accountable by the SASAC. 

Since China entered the WTO in 2001, its SOEs have been the major pioneering force in overseas investment. The global financial crisis in 2008 has been the catalyst for the move. Official figures show 100 out of 120 central SOEs have established overseas branches or administrative organizations. The overseas assets of SOEs amounted to 4 trillion yuan ($610 billion) at the end of 2010, accounting for 20 percent of their total assets.

Ironically, while Chinese SOEs were obsessed with outbound investment mania, their regulators seemed to have stood idle. China established the SASAC particularly for the supervision and management of SOEs, but it still failed to fulfill the responsibility of monitoring the overseas operation of SOEs as evidenced by a series of losses in overseas investment in recent years.