China Aviation Oil (Singapore) lost about $550 million from ill-placed bets on oil prices in 2004. The Chief Executive Chen Jiulin was sentenced to 1,035 days in prison. This year China Railway Construction reported a loss of 4.153 billion yuan ($63.89 million) from its light railway project in Saudi Arabia.

The war in Libya has affected 50 projects undertaken by 75 Chinese enterprises involving $18.8 billion, said the Ministry of Commerce.

A report released by the National Audit Office this May said Sinochem Group, China's biggest chemical trader, lost $15.27 million in its three overseas oil gas projects and another two did not produce profits as high as expected.

While Chinese SOEs witness a dramatically growing outbound investment, the risks are also increasing, said Wang Yong, SASAC Minister.

Wang also summarized the reasons for the investment failure of SOEs. Some did not choose the right projects to invest in as the projects have too little correlation with their main business; some advanced their outbound expansion too fast, exceeding their own capital, management and talent capability; some lacked strict and complete regulations and rules on overseas investment; some were weak in risk management and in the ability to control risks; and some even entangled with mutual competitions.

The management of overseas assets was slack with insufficient risk-control measures among SOEs, compared to their emphasis on overseas investments, Wang said.

SASAC has issued two preventive regulations, but the SOEs themselves need to enhance risk management in their overseas operation, said He Liping, a professor with the School of Economics and Business Administration of Beijing Normal University.

A standard administrative structure and complete internal management mechanism are needed to enhance risk control, especially for overseas investment of SOEs, He said.

Wang Ying, an analyst with the Shanghai-based CBN Research Institute, echoed He's idea.

"At present, the domestic parent SOEs should be responsible for the supervision on overseas assets and properties. A daily mechanism to control risk should be set up and the decision-making procedure should be regulated," Wang said.