sting in a time of growing financial turmoil, state media reported Wednesday. Li Rongrong, head of the State-owned Assets Supervision and Administration Commission, urged the companies to cut costs when getting involved in mergers and acquisitions, the Shanghai Securities News reported.
In a speech Tuesday, he especially warned firms with large-scale investments both at home and abroad, according to the report.
State-owned companies should avoid investments outside their core business, and should take care not to exceed their financial capacity or participate in projects with low returns, according to the newspaper.
Li also warned companies against using bank loans for speculative investments in securities and real estate.
In a statement posted on the administration's Web site, Li said state companies are facing challenges from high global raw material prices, a rising local currency and financing difficulties due to a tight monetary policy.
The Xinhua news agency recently reported that profits of state enterprises controlled by the central government fell 10.3 percent in the first half from a year earlier to 425.6 billion yuan (US$62.3 billion).
The losses largely resulted from major oil and petrochemical companies and electricity firms, which find it difficult to cover soaring costs because of government caps on domestic oil and power prices, the report said.
