Private business gets State support By Fu Jing (China Daily) Updated: 2004-07-27 01:43
In a landmark statement on Monday, the country's cabinet encouraged deeper
reforms and further development of the non-State investment system.
The statement was made public Monday, after a forum of the State Council
focused on improving the country's non-public economy.
Private investors can put their money into any sector not forbidden by laws,
the State Council said Monday.
Improving the country's non-public economy was the focus of Monday's meeting.
In a written statement, Premier Wen Jiabao said the non-public economy is a
very important component of China's socialist market economy.
Wen said different levels of government should draft policies to "encourage,
support and guide" the non-public economy.
Vice-Premier Zeng Peiyan said private entrepreneurs can invest in
infrastructure, public undertakings and other sectors on equal footing with
other types of enterprises.
Zeng said prospects for the non-public sector are promising as the country is
not only offering support but also institutional changes.
With the improved political status of private entrepreneurs and a
constitutional amendment in the offing to provide stronger protection on private
ownership, Zeng said the country is transforming its favourable policies towards
the non-public sector into concrete institutional guarantees.
He said China's non-public sector has made rapid progress, but some problems
remain.
Statistics from the All-China Federation of Industry and Commerce show that
every day there are about 1,500 new privately-owned enterprises with registered
capital of 3 billion yuan (US$361 million).
In 2003, approximately 570,000 new privately-owned enterprises were set up,
with a total registered capital worth 1 trillion yuan (US$120 billion).
The development of the non-public economy has become a policy firmly pursued
by the Chinese Government, Zeng said, noting that both the State-owned economy
and privately-owned sectors are the basis of the national economy.
Experts said the private sector is emerging and gaining clout in Chinese
society but more efforts are needed to make them develop healthily.
"This round of opening-up policies toward private sectors is quite good, but
reinforcement them is a demanding job," said Lin Yueqin, researcher with Chinese
Academy of Social Sciences, who added that private entrepreneurs have long been
worried about their political rights and the protection of private ownership.
He said China has enhanced legislation to protect private property and
created greater incentives for people to establish their own businesses.
But he insisted that enterprises will come across three hurdles despite the
new encouragement from the government.
First, local governments, likely to lose many opportunities for
administrative intervention, are likely to continue in a track of blind
profiteering.
Second, the non-public sector, mainly medium and small businesses, will face
financial difficulties because banks are unwilling lend them money. Meanwhile,
State-owned large enterprises in the same sectors will continue to strengthen
their monopoly.
"Finally, some private companies are still challenged by themselves," said
Lin. He said most private companies in China are small-sized and short of
research and development capacity.
