But the increased payouts may do little to channel wealth towards boosting social security. The Communist Party's new leadership has promised reforms to address the country's yawning wealth gap.
The new dividend payout levels also fall short of not only international norms but payouts that minority shareholders in non-state companies already enjoy, suggesting some conflict within the government over the issue.
"There have been a lot of objections. I think that's one of the reasons even this version of the reform has been postponed several times," said Ding Shuang, senior China economist at Citigroup in Hong Kong.
"At least it's a step forward, but it's still quite low. I would see this as a positive move, but not sufficient," he said.
Under a sweeping plan to tackle inequality unveiled on Tuesday, dividend payouts from SOEs to government shareholders are to increase by 5 percentage points by 2015.
Last year, China's SOEs paid between 5 percent and 15 percent of their net profit in dividends to government shareholders depending on their industry sector.
But the new 20 percent top rate will still be less than the 23 percent average dividend paid from net profits to shareholders in Hong Kong-listed SOEs.
It is also far short of the 50 percent payout discussed internally by China's Ministry of Finance last year.
Such a level would have made China's SOEs comparable to publicly listed companies in the United States. US industrial companies paid out 50 percent to 60 percent on average between 1980 and 2000, a World Bank analysis shows.
The same analysis found an average 33 percent ratio for 49 SOEs in 16 developed economies between 2000 and 2008.
By comparison, Chinese central government-controlled, non-financial SOEs paid dividends worth 9.0 percent of 2011 net profits to the central government last year, official data shows. That compares to 9.4 percent in 2010 and 7.3 percent in 2009.
LOOPHOLES
The inequality plan includes measures to make property speculators and the rich pay more taxes, in an effort to narrow a wide income gap between the urban elite and hundreds of millions of poor in both cities and rural areas.
In January, the National Bureau of Statistics released data showing that income disparity in China had reached beyond the level considered a trigger for social discontent.
China had also promised in talks with the United States that it would increase SOE's dividend payouts to the government.
However, the latest plan is vague on how the dividend receipts will be used. The MOF has fought a long-running battle with the State-owned Asset Supervision and Administration Commission (SASAC), the powerful agency responsible for managing central SOEs, such as China National Petroleum Corp and China Mobile.
While the MOF has battled to use dividends to support general expenditures on programmes like healthcare, education, and pensions, SASAC has recycled most SOE dividends back into the state firms.
Of the 87.5 billion yuan ($14 billion) in non-financial, central SOE dividends and share sales collected for 2011, 85 percent was ploughed back into SOEs in the form of financing for corporate restructuring, mergers and acquisitions, "technological innovation," foreign investments, and other purposes, official data shows.
The latest plan says "a certain portion" of the 5 percentage point increase will be dedicated to social welfare spending. The World Bank has advocated that the bulk of SOE dividends be devoted to social welfare.
"The income distribution plan only provides a blueprint but lacks details at implementation level," noted Zhu Haibin, chief China economist at JP Morgan in Hong Kong.
Companies in the most profitable sectors, including natural resources, chemicals, electricity, telecoms, and tobacco are subject to the highest rate. Arms makers, the postal service, and state research centres pay the lowest rate.
Data on dividends paid by local government-owned SOEs is not readily available. The most profitable SOEs are centrally owned, and many local-government SOEs are exempt from paying dividends.
State banks and other financial firms are not controlled by SASAC and have paid dividends to the government at higher rates of around 35 percent in recent years.