The private sector is rapidly expanding this year since the
nation's economy is steadily growing. The following is a summary
report of China's private sector this year, made by Huang Mengfu,
chairman of the All-China
Federation of Industry and Commerce (AFIC). The report, citing
accurate figures from official departments, describes the
development of the private sector in 2003 and the forecast for next
year.
There are two definitions of the private sector in China. It can
refer to non-state sectors, including individual business, private
enterprises, collectively-owned enterprises, Hong Kong, Macao and
Taiwan invested enterprises, and foreign-funded enterprises.
However, the private sector referred to generally in this report is
much narrower and is mainly composed of the first three kinds of
enterprises.
Rapid development
In 2003, the external environment of the private sector has
continuously improved. The government now maps out regulations to
secure the interests and rights of the private sector. The
development of both private and state sectors becomes complementary
and harmonious. It is now an important part of the national
economy.
The Third Plenary Session of the 16th Central Committee of the
Chinese Communist Party made breakthroughs in non-state economic
theory and policies, deciding to actively guide the development of
the private sector. The State Development and Reform Commission is
currently drawing related regulations. The State Administration of
Industry and Commerce is said to be abolishing regulations which
discriminate against the private economy and hinder its
development. It is also reforming its registration system to better
serve private enterprises. Local provincial governments are also
adopting many measures to boost its development.
Indeed, the private sector has been rapidly and positively
developing in the following ways:
First, employment and tax revenue keeps rising. Despite the
impact of SARS, employees in the private sector are increasing. By
the end of September, employees of medium- to large-scale private
manufacturing enterprises reached 8.83 million, up 16.12 percent
over the same period last year, while the employment of
foreign-funded enterprises increased 10.72 percent.
The tax revenue from the state sector during January-September
was about 448.668 billion yuan (US$54.2 billion). The non-state
sector (including foreign-funded enterprises) paid tax of 553.22
billion yuan (US$66.8 billion), accounting for 36.2 percent of the
total. Among them, the medium- and large-scale private enterprises
turned in 42.167 billion yuan (US$5.1 billion), up 34.22 percent
over the same period last year.
Second, the private sector keeps double-digit growth. The added
value of scaled enterprises increased 16.7 percent in the first
nine months, while that of individual and private enterprises in
the secondary industry were expected to rise 18 percent.
Third, private investment surged. In the first nine months,
total fixed-asset investment was 3.435 trillion yuan (US$415
billion), up 30.5 percent. Among them, investment from collectively
owned enterprises and individual businesses was about 957.7 billion
yuan (US$115.7 billion), up 30.3 percent and the highest level in
the past eight years. Direct investment of foreign-funded
enterprises was about US$40.238 billion, up 11.82 percent.
Fourth, the export is continuously expanding. During the
January-September period, the export from the non-state sector was
about US$207 billion, rising 45.3 percent, and far exceeding the
11.8 percent growth rate of the state sector. The export growth of
private enterprises was about 154.1 percent, while that of
foreign-funded enterprises was 38.9 percent. Export from the
non-state sector has now accounted for 67 percent of the total.
Achievements of the private sector
First, investment from the private sector is now continuously
diversifying, and investment structure has greatly improved.
Private capital is now brought into heavy industry, financial
services, the educational and cultural industries, media and city
infrastructures, and municipal engineering fields. Private
enterprises have begun to form alliances for investment, and modern
logistics are the focus of their investment in the service
industry.
Second, private technological enterprises keep rising. Nowadays,
over 5,000 private technological enterprises have established
partner relationships with more than 500 domestic universities and
research institutes, which provide technological support for
enterprise innovation.
Third, private enterprises have become much stronger, and have
primarily set up a modern enterprise system.
Fourth, they have actively participated into the restructuring
of state-owned enterprises.
Fifth, private entrepreneurs have showed their social
responsibilities when facing incidents like SARS. Incomplete
statistics show that AFIC member enterprises donated cash or
merchandises worth 840 million yuan (US$101 million), despite their
production being affected.
Sixth, private enterprises now actively promote corporate
culture building.
Seventh, local chambers of commerce have begun to protect the
interests and rights of member enterprises and promote industry
self-discipline.
Eighth, the enthusiasm of business startups has soared, the
private sector accordingly getting a boost. The local branches of
the AFIC have also helped the development of the private
sector.
Forecast for next year
The year 2004 will be an important period for the growth of
China's private sector. We are optimistic that there will be the
following changes next year.
First, the legal environment and public opinion toward the
private sector will be significantly improved. The protection of
private property will be fulfilled in the nation's Constitution,
and attitudes toward private enterprises will fundamentally
change.
Second, the development of the private sector will be
safeguarded through laws and regulations.
Third, the mixed ownership economy will be vital for further
development. The policy hindrance on private enterprise's
participation into SOE restructuring will be cleared away, and
trans-regional mergers and acquisitions will be encouraged.
Fourth, private enterprises will be granted national treatment,
and market entry problems will be solved.
Fifth, private investment will replace state investment as the
dominant force of fixed-asset investment.
Sixth, the enthusiasm of startups will keep rising.
Seventh, the startup rush of private technological enterprises
will emerge.
Eighth, small and medium-sized private enterprises will get
all-around support.
Ninth, large private enterprises will win the support of
government at all levels.
Tenth, private enterprises will quicken its pace to expand
international markets.
Eleventh, the financial support policy for private enterprises
will be strengthened.
Twelfth, the function of chambers of commerce and industrial
associations will be strengthened.
(China.org.cn by Tang Fuchun and Daragh Moller, December 11,
2003)