Private Business Rising as Impetus to Chinese Economy

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Last updated at: (Beijing Time) Wednesday, April 10, 2002

Private Business Rising as Impetus to Chinese Economy

Private business has become an important impetus to economic development of China. Taking into account holding companies, foreign-funded companies, township-owned business and private business in rural area, private businesses accounted for 60 per cent of the country's economic output.

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Private business accounts for 60% of country's GDP

Private business has become an important impetus to economic development in China, according to the Asian Development Bank (ADB).

According to official statistics, private businesses in China accounts for 13 percent of China's gross domestic product (GDP). ADB says that taking holding companies, foreign-funded companies, township-owned business and private business in rural area into account, private business accounted for 60 per cent of the country's GDP.

ADB said over half of China's 200 million employees in urban areas open up their own business or work for private businesses, as private business is playing an ever more important role in the service and hi-tech industries. There are 8 million small-and-medium-sized private companies in China, as many more state-owned enterprises are privatized.

Private business expected to boost economy

ADB estimated China will have to create eight million to 10 million jobs annually for extra labor forces in urban areas and to help five million laid-offs. In 2001, the unemployment rate was 3.6 per cent, which, in effect, would exceed seven percent. Vital private businesses are expected to boost the local economy and create more job opportunities in China.

The Chinese government has adopted some concrete measures to boost private business in terms of legislation, administration, foreign trade and financing services.

But China still needs to take further steps to cultivate a sound environment for private business operations. An imminent problem is how to ensure an equal footing for private businesses to compete with other players, for example State-owned firms, in raising capital, recruiting excellent staff and wooing for lucrative economic projects.

In the long term, China's entry into the World Trade Organization (WTO) would help build a legal system for private business, said Tang Min, a senior economist with ADB.

Private Business Faces New Growth Chances in China

Following the country's accession to the World Trade Organization (WTO), the non-state sector of the economy in China is facing more opportunities for development as the government has promised to open up important markets like telecommunications, retail business and banking to both foreign and private investment.

With restrictions on the sector being reduced or removed, non-state firms are facing enormous opportunities to participate in the ongoing economic restructuring, expansion of foreign trade, use of foreign funds, and increasing exchanges with international enterprises and research and development (R&D) institutions. >>details

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