Wu Jinglian said, "Chinese private enterprises have developed very
rapidly yet they still have five challenges to face." Wu is
recognized as a highly respected Chinese economist and was speaking
at a recent Chinese Economic Forum in Beijing. He is of the view
that the Chinese business sector and especially private enterprises
within the sector are now facing increased competitive pressure
following
China's WTO
entry.
An Influx of Foreign Enterprises
Foreign enterprises are increasingly moving their factories into
China and now enjoy much the same cost advantages as their Chinese
counterparts. Compared with Chinese enterprises, foreign firms have
more opportunities to reduce their trading costs.
Natural Barriers to Rural Growth
Chinese farm production is at a competitive disadvantage to foreign
farm production. Opportunities to reduce production costs are
restricted due to the limited land resources available to support
such a huge population. Consequently farmers are one of the most
vulnerable groups in China. As their income is held back, there is
a knock-on effect nationwide with limited purchasing power in rural
markets generally. This in turn can only hinder the development of
Chinese private enterprises.
Funding Difficulties
Chinese enterprises face challenges arising from a difficult
financial environment. These make it difficult for them to raise
new funds either directly or indirectly.
Malpractices
The commercial environment is also not good enough. It has its
problems of scandals, defaults, unfair competition and lack of
tight control. This is just one more factor, which hinders the
development of Chinese private enterprises.
Still Developing
Finally, although Chinese enterprises have already come a long way
in terms of development, they are not yet on a level playing field
with the world's major companies due to their relative lack of
experience and technology.
Statistics show that recent years have seen major improvements in
Chinese private sector. They are now able to play a more important
role in the development of the Chinese economy. During 2001 the
overall output of Chinese private enterprises increased 10 percent,
their turnover in retail sales of household products was up 14.6
percent, and registered capital rose 30 percent. They also provided
21.4 million laid-off workers with jobs.
Since the beginning of this year, Chinese private enterprises have
further stepped up their development. Wu Jinglian said he was
optimistic that Chinese private enterprises will have a bright
future once they overcome the five challenges.
(china.org.cn by staff reporter Zheng Guihong, October 15,
2002)