China's central state-owned enterprises (SOEs) will opt for Hong Kong as their first choice for overseas listing, but dual listings on the mainland and in Hong Kong will be popular, said Shao Ning, deputy director of the State Assets Supervision and Administration Commission (SASAC).

Large central SOEs can raise hundreds of millions of dollars by listing on overseas stock markets, while the country's emerging A-share market for trading of Renminbi-denominated shares still cannot fully cope with their demand for capital, he said.

Overseas listing would also enable central SOEs to strengthen corporate governance and streamline operations using market mechanisms, he added.

Responding to recent concerns that listing state-owned companies on foreign stock markets may cause a huge loss of state assets and marginalize domestic capital markets, Shao said the SASAC was calling on companies already listed overseas to offer shares on mainland stock markets.

Shao believes the domestic capital markets will benefit from the dual listing of central SOEs on the mainland and Hong Kong stock markets, by "having a number of listed companies that operate in accordance with international norms".

Next year, the SASAC will formulate a budget system for all operations involving state capital and set up management companies for state-owned assets, in order to accelerate the restructuring of central SOEs, said Shao.

The SASAC will give priority to key central SOEs, trying to ensure that they have adequate capital. Unimportant and loss-making ones will be taken over by assets management companies.

As restructuring and mergers progress, the number of China's central SOEs has decreased from 198 in April 2003 - when the SASAC was established - to 165 this year.

More efforts are needed to further consolidate the number of SOEs, in order to "relocate resources in a more efficient way", said Shao.