In 2005 private Chinese enterprises generated half the country's
wealth and they're now in a position to play an even more
significant part in the country's future economy, said a key
government think-tank in Beijing yesterday.
"The non-state-owned sector is projected to contribute
three-quarters of China's GDP in five years, when at least 70
percent of the country's firms will be privately owned," the
Chinese Academy of Social Sciences stated in its annual report.
While the private sector lurked in the shadows only 25 years ago
its current high profile was a testament to the country's support
policies for such enterprises but more equitable treatment was
needed for them, industry representatives suggested at a seminar to
release the report's findings.
Based on data from the National Bureau of Statistics the
Blue Book of the Non-State-Owned Economy revised earlier
estimates that domestic private businesses had contributed
one-third to China's GDP in recent years. The latest findings
raised their contribution to 50 percent last year. They also
provided eight out of 10 new jobs in non-agricultural sectors.
If the contribution made by overseas-funded ventures was added
these private enterprises accounted for approximately 65 percent of
the national economy in 2005 and the ratio was expected to jump to
75 percent by 2010, the report says.
Private enterprises had boomed in recent years when the
government set out constitutional guarantees and policy incentives
to buoy the healthy development of the sector and protect the
property of entrepreneurs. As a result they've galloped into
industries once dominated by state-owned enterprises.
For example private firms generated sales of 797.3 billion yuan
(US$101 billion) last year--an annual growth of 55 percent since
2000 -- in smelting and processing of ferrous and non-ferrous
metals alone. They've also invested in sectors such as postal
services and communications, power and coal gas, according to the
report.
Along with this the growth rate of taxes paid by the private
sector has by far surpassed that of state companies and these
businesses have become major contributors to state coffers.
Over the past five years taxes paid by private firms grew by at
least 40 percent a year compared with an annual increase of less
than 7 percent by state businesses. "In many a local region in
China, tax revenue generated by the private sector accounts for
over 80 percent of local government revenue," the report
observes.
Despite their stellar performance said Gu Shengzu, vice-chairman
of the All-China Federation of Industry and Commerce, private
companies still faced barriers in securing finance which was
curtailing their development. Less than 10 percent of total bank
lending was accessed by domestic private firms while
overseas-invested businesses enjoyed preferential treatment in
taxation and financing, he pointed out.
Chen Yongjie, one of the main authors of the report, said
private companies must be given the level playing field promised to
them in terms of market access, financing and tax policies. He
believed that a group of conglomerates competitive in both local
and global markets would emerge in the private sector by 2010.
"Some of them will join the ranks of the Global 500," he
forecast.
(China Daily September 22, 2006)