China's state-owned enterprises (SOEs) present a strange dilemma--they are making profits but also draining state assets. This has prompted the National Audit Office to set the examination of SOEs' financial accounts as a key task for this year.

According to a Ministry of Finance report in February, performance of Chinese SOEs maintained stable growth in 2005, generating 900 billion yuan in profits, a year-on-year increase of 25 percent. A comparison of figures in recent years shows rising profits in key SOEs, especially those in monopoly industries.

In 2005, the 169 SOEs directly supervised by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) reported profits of 640 billion yuan, accounting for more than 70 percent of the total profits earned by all SOEs.

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