New journey begins for China's private sector

07Nov 2018
Correpondent
The Guardian
New journey begins for China's private sector

WITH unswerving support from the central authorities, China's private enterprises are set to embark on a new journey and embrace a brighter future.

Wang Yang, a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee and chairman of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), presides over the first CPPCC online conference in Beijing, capital of China

Recently, President Xi Jinping presided over a symposium on private enterprises, saying that China will unswervingly encourage, support and guide the development of the non-public sector and support private enterprises to move toward a broader stage.

The private sector plays an important role in the Chinese economy, contributing more than 50 percent of tax revenue, 60 percent of GDP, 70 percent of technological innovation, 80 percent of urban employment and 90 percent of new jobs and new firms.

Xi reiterated the status and functions of private enterprises, adding that the sector has played an important role in developing the socialist market economy, transforming government functions, transferring surplus rural labor and tapping the international market.

"Over the past 40 years, the private sector of the economy has become an indispensable force behind China's development," Xi said.

However, some private companies have recently encountered difficulties and problems in their development in terms of market, financing and transformation.

The principle and policies to unswervingly encourage, support and guide the development of the non-public sector have not changed, and the principle and policies to provide a sound environment and more opportunities in the sector have not changed either.

Xi demanded the implementation of policies and measures in six aspects to create a better environment for the development of private enterprises and to address their difficulties, including reducing their burden of taxes and fees, addressing the difficulty and high cost of financing, and leveling the playing field for them.

Policy support has already been stepped up. Late last month, the government decided to facilitate bond issuance by private companies, with liquidity support from the central bank lent to professional institutions.

The People's Bank of China, the country's central bank, announced that it will provide guidance for supporting bond issues of private firms by offering a part of the initial capital to financial institutions, and also increase the quotas of re-lending and rediscounts to ensure that targeted loans can be channeled to private firms.

With the new commitments to supporting the private sector, more favorable policies are expected be rolled out soon.

The difficulties and problems faced by private enterprises are just a natural part of development, and will surely be solved with effective measures.

As private companies and entrepreneurs are once again reassured by central authorities, their potential is to be further unleashed while China's economic strength is to be further improved.

Meanwhile, Vice Premier Liu He reiterated China's unwavering support for the private sector in an interview with Chinese reporters.

"I want to emphasize in particular that we must uphold the basic economic system," Liu said. "There must be no irresolution about working to consolidate and develop the public sector; and there must be no irresolution about working to encourage, support and guide the development of the non-public sector."

The remarks came amid concerns of private enterprises about the implementation of the basic economic system.

Liu acknowledged that misunderstanding and deviation existed in implementation, citing a viewpoint of some lenders that it was safe to provide loans to state-owned enterprises, but politically risky to loan to private businesses.

"This kind of understanding and practice is completely wrong," Liu said.

The private sector plays an important role in the economic system, contributing more than 50 percent of tax revenue, 60 percent of GDP, 70 percent of technological innovation, 80 percent of urban employment and 90 percent of new jobs and new firms.

"Without private enterprises, the entire economy cannot achieve stable development," Liu said.

Liu said the practices of not supporting private businesses for "private safety" are politically problematic and must be rectified.

"We must uphold the basic economic system and give full play to micro, small and medium-sized enterprises and the private sector in economic and social development," Liu said.

"We must pay high attention to the difficulties faced by micro, small and medium-sized enterprises and roll out precise and effective measures to help them.

"Efforts should be made to intensify research on working out policies aiming for boosting growth of private businesses in aspects including reducing burdens from taxes and administrative fees, solving financing problems, improving environmental governance, as well as enhancing technological innovation ability," Liu said.

"Efforts should also be made to help private businesses improve their own capability and adapt to market changes, and achieve high-quality development."

The vice premier added that the State Council and the All-China Federation of Industry and Commerce will send special groups to inspect the implementation of the basic economic system and the development of micro, small and medium-sized companies.

At the same time,  China's national political advisory body on Wednesday held its first online conference to discuss improving the business environment and promoting high-quality development in the private sector.

The meeting was presided over by Wang Yang, a member of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee and chairman of the Chinese People's Political Consultative Conference (CPPCC) National Committee.

During the meeting, 13 CPPCC members made speeches at parallel sessions in Beijing, Zhejiang, Hunan and Guangdong, or through cellphones, with 800 members putting forward suggestions via mobile platforms.

Political advisors agreed that the private sector had a bright outlook as China's stable and positive economic trend remained unchanged, and authorities were working to improve policy support for private businesses.

The participants said that greater efforts were required to widen market access for private capital, in particular public infrastructure projects that could operate in market-oriented ways and open to foreign capital, adding that government approval should be more transparent, standardized and convenient.

There also should be stronger protection of property rights, bigger tax reductions and improved financing, according to the meeting.

The CPPCC members also advised private businesses to focus on their main business and speed up transformation and innovation to make a contribution to the high-quality development of the economy.