Alternative growth engine
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A $586-billion government-led stimulus package enabled China to rebound out of the global recession stronger than expected last year.
Yet, Chinese policymakers are increasingly realizing that the ongoing recovery can hardly last if private investment is not properly boosted on time.
Last week, the Chinese government issued a much-needed guideline that further encourages private investment in a wider range of key industries, such as public utilities and financial services.
This is the latest effort to create a fair and transparent environment for private investment and enlarge its scope of entry. The new guideline has fleshed out a similar regulation that the government had unveiled in 2005 to promote private investment.
Though the 2005 guideline outlined sectors that the private enterprises were allowed to enter, its lack of detail hindered implementation.
The new support plan marks a key step forward to ignite private investment as the new engine of economic growth.
It is hoped that Chinese policymakers will come up with more detailed measures to translate these paper pledges into tangible action to stimulate non-governmental investment.
This is particularly important at a time when the country can no longer rely on the government-led investment boom to sustain its recovery.
China's credit binge and unprecedented stimulus package have encouraged State-owned companies to invest so rapidly that policymakers are concerned about economic overheating and bad loans.
However, while the government begins its exit from stimulus policies, a surge in private investment is badly needed to pick up from State enterprises eager to rein in their expansion.
By providing more investment opportunities and streamlining administrative procedures, the new guideline has made a good start in trying to explore the huge potential of China's private investors.
Surely, private investors do deserve better treatment for their role in creating jobs, boosting domestic consumption and facilitating economic reforms.
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