From February this year, the All-China Federation
of Industry and Commerce (AFIC) carried out a survey of private
firms that have gained entry to the previously state-monopolized
sectors of infrastructure construction and public utility
operation.
The following is a summary report published on
December 21 in China Business Times, a Beijing-based
newspaper affiliated to the federation.
Over 170 firms in 23 provinces and municipalities
responded, 59 of which had turnovers exceeding 100 million yuan
(US$12 million). This in itself indicates that private firms have
established a significant presence in the sector.
They were engaged mainly in urban gas supply, power
and heating supply, power plants, urban infrastructure
construction, and construction of high-level roads and bridges.
Comparatively few of them were involved in tap water supply, urban
sewage and garbage disposal, civil aviation, railway or
telecommunications.
Although 89 of the firms surveyed didn’t give their
investment volumes for 2003, those of the remaining 81 still
totaled 12.8 billion yuan (about US$1.54 billion), while their
total revenue was 7.4 billion yuan (about US$894 million).
Firms involved in gas supply, heating, power and
bridge construction reported investments higher than revenues.
However, tap water supply, sewage and garbage disposal and urban
infrastructure construction firms reported the reverse, showing
they had begun to reap profits in 2003.
About 60 percent of the firms said they wished to
invest further in these sectors, and are confident about future
development and gains. They also hoped that the AFIC can improve
information flow between them and government, reaffirming the need
for effective industrial organizations.
Central government has pushed to open up these
sectors, but problems remain due to the lingering influence of the
planned economy.
Issues like pricing mechanisms, market entry
qualifications, operating rules and supervision measures still
attract calls for more effective regulation and standardization.
Current policies differ from region to region, maintaining local
protectionism and bias against new and private firms.
In some sectors like power and gas supply,
industrial chains are monopolized by state-owned firms, so private
companies continue to be disadvantaged. They can also lack
financing channels and have poor access to timely and accurate
government information.
The loosening of market entry policies provides new
opportunities for private firms, but there is still a lot of room
for development in these sectors. Lower entry thresholds should
lead to greater competition and efficiency, and ultimately to
better quality services.
(China.org.cn by Tang Fuchun, December 26, 2004)