Li Rongrong, head of the State-owned Assets Supervision and Administration Commission, was quoted by the China Securities Journal as saying profits were also 26 per cent higher than a year ago, although he gave no absolute value.

Speaking on Sunday at a regional forum on the southern island province of Hainan, Mr Li said government measures to tackle the financial crisis had shown effects and that he was 'cautiously optimistic about the future.'

China unveiled a four-trillion-yuan (S$882 billion) stimulus package in November which focused heavily on investment in road and railway projects, a sector where state-owned companies dominate.

While acknowledging central government-controlled companies did not lack cash, Mr Li warned that they should not rush to acquire overseas assets.

'I think the biggest problem with Chinese companies' 'going abroad' (activities) is management,' he said at the forum in a video clip posted on the website of the official Xinhua news agency Monday.

They should 'be cautious at buying (overseas) companies' and make sure they do not over-extend themselves, he cautioned.

China currently has 138 companies directly controlled by the central government.

Affected by the global downturn, these companies posted a profit of 665.3 billion yuan last year, down about 30 per cent from 2007, according to Chinese media reports. -- AFP