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State firms in China launch US$1.8 billion fund to invest in poor regions

A group of 51 enterprises run by China’s central government has launched a fund to invest in the country’s poorest regions as part of a state plan to use market forces in the fight against poverty.

The fund starts at 12.2 billion yuan (HK$14 billion), but firms including the Three Gorges Project Corporation, the State Grid Corporation and the State Development and Investment Corporation will gradually increase it to 100 billion yuan, the State-Owned Assets Supervision and Administration Commission said on its website.

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The state-run Xinhua news agency says 70 million people still live on less than 2,300 yuan per year, which is China’s official poverty line. China has said it aims to reduce that number by at least 10 million annually, starting this year.

Xinhua said the fund would invest in resources, construct industrial parks and promote urbanisation in China’s poorest regions.

It said priority regions included ethnic minority and border areas as well as old “revolutionary bases” of the Chinese Communist Party.

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China’s cabinet said in a separate document on Tuesday that it would launch a pilot programme at the end of the year to develop hydropower and mineral resources in some of the most poverty-stricken regions.

It said the programme would allocate stakes in hydropower and mine projects to rural collectives to give impoverished communities a bigger share of the profits.

China is in the middle of a sweeping reform programme designed to rejuvenate its lumbering state sector and create industrial champions competing internationally.

But the government and the Communist Party have delivered mixed messages to giant state firms, saying they should be more responsive to the market while fulfilling their social and political responsibilities.

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President Xi Jinping told heads of state-owned firms at a meeting this month that the Communist Party would continue to play a leadership role in reforming the state sector.

He described state-owned enterprises as “the most dependable support for the party and the state” and an important force behind party efforts to “win many more historical victories”, according to an account of the meeting published by the supervision and administration commission.