China's biggest state firms will be required to increase their dividend payouts by 5 percentage points from this year as part of the Communist Party's broader attempt to streamline industry and boost competition.

The Ministry of Finance said  that 121 central government-owned companies will have to pay dividends up to 25% of profits after the increase, a decision originally agreed at last November's Communist Party third plenum.

Forcing companies to increase their payouts is intended to cut the bloat in the state economy, will increase wealth redistribution and challenge the industrial fiefdoms which were allowed to grow under the previous government.