More sectors previously out of bounds to private investors, even
national defense, will soon be opened up to them, according to a
document released by the State Council Thursday.
In what appears to be a strong signal of support for China's
surging private economy, they said private enterprises will soon be
allowed to invest in electricity, civil aviation,
telecommunications and other sectors heavily controlled by the
government.
The document said that private companies would even be able to
invest in infrastructure construction, public undertakings,
financial services and national defense, which have to now been
monopolized by the state sector.
The announcement follows research by a group of cabinet
departments including the National Development and Reform
Commission (NDRC) and the State Council Research Office.
Lin Yueqin, a researcher with the Chinese Academy of Social
Sciences' Economic Research Institute, told China Daily
that the State Council's pronouncement is "comprehensive and
encouraging."
"It is another milestone for the government to deliver their
backing over essential contributors to China's economy," said Lin.
"But we need more efforts to implement them." He said this would
build on development of the private economy since the Promotion Law
on Medium and Small Enterprises took effect in 2003 and the
government's investment and financing system reforms of last
year.
An NDRC spokesperson said the government should attach great
importance to the status of the private sector as China is becoming
more market-oriented and integrated into the global economy.
He said the private economy now accounts for one-third of the
total, whereas in 1978 it comprised less than 1 percent of it.
The Research Association on the Private Economy said that
production value of the private sector rose from 42.2 billion yuan
(US$5.1 billion) in 1989 to 2 trillion yuan (US$241 billion) in
2003.
Despite those achievements, the NDRC spokesperson admitted that
financial headaches were the top difficulty facing private
companies, but that the government is encouraging them to seek
capital both from banks and the stock market.
(China Daily February 25, 2005)