The State Development and Reform Commission (SDRC) is reviewing
approximately 120 regulations and rules to abolish clauses that
limit private capital flow, as part of the effort made by the
central government to encourage the development of the private
sector.
Ou Xinqian, vice minister of the SDRC, said the commission might
also work out an investment guidance and detailed list of
"encouraging industries" for private capital. To attract investment
from overseas, China set guidelines for overseas investment several
years ago.
A decision made by the Third Plenary Session of the 16th CPC
Central Committee earlier this month allowed private capital to
enter infrastructure, public utilities and other sectors not
prohibited by laws and regulations.
The decision allowed private enterprises the same preferential
treatment as their state-owned counterparts in investment, finance,
taxation, land use and foreign trade.
"The central government is fully aware of the fact that an equal
competition environment for the private sector has become crucial
for the high-quality growth of China's economy," said Prof. Li
Yiping with the Economic Institute of the prestigious
in Beijing.
Local governments have also acted on the guidelines of the
decision. In China's northernmost Heilongjiang
Province, the local government has provided 40 infrastructure
and basic industrial projects worth 35.3 billion yuan (US$4.24
billion) for private companies to bid for. In the past, all these
projects were monopolized by state firms.
In some industries where private capital was allowed to invest,
there were numerous unwritten limits with regard to market access,
land use, and taxation, which stopped full participating of private
capital.
The share of private capital investment in total social
investment has increased greatly over the past two decades, and is
now up to 40 percent, according to the National Bureau of
Statistics?(NBS).
The NBS also noted that the private sector has contributed two
thirds to the overall growth of the national economy while one
third comes from the state-owned sector.
As a set policy, the government has decided that all areas
opened to foreign capital will be opened to domestic private
capital. Also, private capital is encouraged to join in the
restructuring of former state-owned firms.
Bolder steps will follow.
A noted economist who worked on central government policies in
the area, acknowledged that the financial sector will open wider
still to private capital in the years ahead as private investment
in banks and small and middle financial institutions will be
encouraged. To improve the financing capacity of private firms, the
government will set up a special warranty system and allow equal
treatment in the securities listing and bond issuance.
"It's the direction of reform to provide unified policy to
companies no matter what their structures of ownership are," said
Prof. Li Yiping.
(Xinhua News Agency October 28, 2003)