Chinese Private Economy Seeking Wider Development Space

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Last updated at: (Beijing Time) Sunday, April 07, 2002

Chinese Private Economy Seeking Wider Development Space

The Chinese private sector, which makes up more than 30 percent of the country's gross domestic product (GDP), is seeking wider development space in the national economy.

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The Chinese private sector, which makes up more than 30 percent of the country's gross domestic product (GDP), is seeking wider development space in the national economy.

Lu Guanqiu, ranked No. 7 among the top magnates in the mainland of China by Forbes magazine, recently submitted a motion to the Fifth Session of the Ninth National People's Congress (NPC), asking it to give full play to the role of the private sector in creating jobs in the macro-economy.

Lu, an NPC deputy, comes from east China's Zhejiang Province, which has the most developed private economy in China. In the year 2000, about 6.8 percent of China's GDP came from the province, which has only 3.7 percent of the total national population.

Over the past 30 years, Lu Guanqiu has developed an agricultural machinery factory into a modern enterprise with total assets of six billion yuan (about 723 million US dollars), employing more than 10,000 workers.

Lu suggested that the government make preferential policies to encourage the private industry to create more jobs.

China's private economy has developed from the position of playing a minor role to being one of the major components of the socialist market economy.

It is estimated that the share of the private sector in China's GDP has reached 33 percent, a little lower than the 37 percent of the state-owned economy. The other 30 percent comes from agriculture, the collective economy and the foreign-invested sector.

The development of the Chinese private economy started in the early 1980s, and it grew at an annual speed of 20 percent, much faster than the growth rate of the national economy's 9.5 percent over the past two decades.

Xie Taijian, president of the Federation of Industry and Commerce of south China's Guangdong Province, said that private enterprises have achieved great success because they are market- oriented and have a flexible operation mechanism.

Xie is running a computer company which, currently affiliated to the Science and Technology Department of Guangdong, is turning itself into a stock company. Xie said that he hopes to introduce private capital into his firm and develop it into the flagship of the computer industry.

Last October, Beijing canceled the regulations limiting the development of private enterprises, and giving them equal treatment with state-owned and collective enterprises in the fields of market access, land use, bank loans, taxation, and import and export.

Problems getting bank loans have been a bottleneck for the development of private enterprises.

He Xiaoming, a researcher at the Office for Economic Restructuring under the State Council, said that controls should be loosened to help medium- and small-sized enterprises and private firms get bank credit more easily.

An analysis made by Canada's Toronto-Dominion Bank Financial Group points out that China's ongoing reform of its economic structure and rapid urbanization will increase the private sector' s contribution to the country's long-term economic growth.

Statistics show that the number of registered private enterprises had reached 1.76 million by 2000, and their total registered capital topped 1.33 trillion yuan. In addition, more than 20 million workers were employed by private enterprises.

Some of the most outstanding owners of private enterprises such as Lu Guanqiu, Wang Wenjing, Shen Aiqin and Nan Cunhui, are deputies to the NPC, China's top legislature.

Meanwhile, the All-China Federation of Industry and Commerce has submitted a proposal to the national session of the Chinese People's Political Consultative Conference (CPPCC) Ninth National Committee, demanding judicial protection for private enterprises.

Li Peng, chairman of the Standing Committee of the NPC, said in his work report that China will accelerate the drafting of the property law this year.

In addition to their economic contribution, private enterprises are playing a more important role in social development. Chint Group Corporation, a producer of electrical equipment in Zhejiang Province, earmarks 10 million yuan every year to buy social and endowment insurance for its employees.

Nan Cunhui, chairman of the board of Chint Group, said that it is beneficial to the enterprises to promote social insurance, and the development of enterprises should be combined with the needs of the country.

The Chinese government has noticed the importance of private enterprises in the reemployment of workers laid off by state-owned enterprises.

Chinese Premier Zhu Rongji pointed out in his government work report this year that China should encourage and support the healthy development of the private economy.

A new research report on China's social strata made by some scholars at the Chinese Academy of Social Sciences says that private property will play the same role as state-owned property in forming the economic foundation and the overall national strength of socialist society.

Zhang Dejiang, secretary of the Zhejiang Provincial Committee of the Communist Party of China, said that the contribution of the private sector in pushing forward the rapid economic growth of the province can not be overlooked.

Analysts say that the mode of development of Zhejiang's economy will offer a new inspiration for the further development of China' s economy as a whole.

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