China's Communist Party (CPC) took another step to embrace non-public economy on Sunday by promising to unswervingly encourage, support and guide the development of the non-public sector" in its latest amendments to the Party Constitution.
This is the first time in its history that the CPC mentioned public and non-public sectors in the same breath in its Constitution established 85 years ago when private economy had been strongly repulsed as a dreg of capitalism.
The revision was based upon the previous statement that the Party would "stick to and perfect the basic economic system which takes public ownership as the main part with varied economic ownership developing together."
Observers say this change may usher in a new pattern featuring equal competition and mutual stimulation among different economic ownership and further release the vitality of subordinate non- public sectors. But the dominant position of public sectors represented by state-owned and state-controlled enterprises will remain.
Twenty-nine years into the economic reforms, China's previously monolithic public ownership has been gradually shattered, with 57 percent of local companies or 4.95 million being privately owned by 2006, contributing nearly one-third of the country's total tax revenue.
Chen Ailian, board chairman of the Wanfeng Auto Holding Group, Asia's largest aluminum wheel producer, attributed the booming of private economy to the constant policy recalibrations of the Party and government to introduce in competition, encourage individuals to pioneer their own businesses and remove political constraints.
At the 16th CPC National Congress in 2002, the Party modified its Constitution not only to allow "advanced individuals from other social strata" to join the Party but also clarify the responsibilities of Party branch in non-public economy for the first time.
This amendment catered to the political aspirations of non- public industry and expanded the foundation of the Party to professionals and private entrepreneurs.
A joint survey released by the United Front Work Department of the CPC Central Committee and the All China Federation of Industry and Commerce in 2006 showed private entrepreneurs have expressed a strong interests in participating in the discussion and administration of state affairs. About 28.8 percent of the polled took it honor to be elected as a member of the Chinese People's Political Consultative Conference or a deputy to the National People's Congress.
Currently, nearly three million of the Party's 73 million members come from non-public enterprises. Last year alone, a total of 1,554 private entrepreneurs joined the CPC, taking up 14.4 percent of the 10,773 members from new social strata.
Spokesman Li Dongsheng for the 17th CPC National Congress which closed on Sunday said that private entrepreneurs were also builders of socialism with Chinese characteristics just like workers, farmers, intellectuals, cadres and servicemen -- the traditional backbone stratum of the CPC.
"Facts proved that absorbing private entrepreneurs into the Party could help expand the popular foundation of the Party, facilitate the healthy development of non-public economy and Party building and elevating the vigor of the Party," he said.
In 2005, the State Council promulgated the first ever governmental documents to support and facilitate the growth of non- public economy and pledge to grant non-public enterprises equal treatment with all other enterprises. It was these documents that allow Liu Yonghao and his New Hope Group, originally a feed manufacturer, to branch into the previous off-limits of banking and securities industries to become the largest shareholder of Minsheng Bank.
After writing protection of private property into the Constitution, China's legislators passed the Property Law and Enterprise Income Tax Law this year, demonstrating the government's determination to protect private assets.
Zhou Tianyong, a researcher with the Research Office of the Party School of the CPC Central Committee, said that the biggest obstacle standing in the way for the expansion of China's non- public economy was the capital shortfall.
Unlike developed countries where companies tend to raise capital from secondary stock or debt markets, China sees a fledgling and fragile financial market. Banks, largely state-owned, remain the major source of capital for companies. But they have long been ordered by the governments to bankroll large enterprises. The capital needs of small firms were often neglected.
Among the country's 500 biggest indigenous companies ranked by the China Enterprise Confederation and the China Enterprise Directors Association for 2007, 349 or 69.8 percent are state- owned or state-controlled, generating aggregate sales revenue of 1.49 trillion yuan, about 85.2 percent of the country's total. The big-names range from China Telecom to China National Petroleum Corp.
"It's good to see China has more conglomerates. But to spread the wealth much more fairly, the government needs to foster a culture encouraging the people to start up their own business and establish a system helping them to grow their business more easily," Zhou said.
(Xinhua News Agency October 21, 2007)
