Private Sector Gets Full Access to 'Restricted Areas'

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Last updated at: (Beijing Time) Sunday, March 09, 2003

Private Sector Gets Full Access to 'Restricted Areas'

China has opened all areas where private capital was once banned, a demonstration of its efforts to perform its commitments to the WTO and implement the policy of stimulating domestic demand.

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China has opened all areas where private capital was once banned, a demonstration of its efforts to perform its commitments to the WTO and implement the policy of stimulating domestic demand.

"All areas opened to foreign capital will be opened to domestic private capital," said Wang Chunzheng, vice minister of the State Development Planning Commission, at a press conference Saturday as sidelines of the ongoing first session of the 10th National People's Congress (NPC), China's top legislature.

The landmark event in this regard was the acquisition by the Wenzhou-based private Junyao Group of the Three Gorges airport in central China's Hubei Province and 18 percent of the shares of the Wuhan Airlines, an affiliate to the state-owned Eastern Airlines Group, an area that private capital used to be strictly banned.

It was learned that the country used to shut the doors to private capital in nearly 30 industries, especially infrastructure, new services and large manufacturing. But now the country has allowed private capital into all areas other than those that hold the lifeline of the economy. They include banking, securities, telecommunications, tourism, education, medical services, auto industry, civilian satellite, large equipment manufacturing and large scaled integrated circuits.

In his Government Work Report to the current NPC session, Chinese Premier Zhu Rongji said that the government should "expand the areas open to private capital and create an environment for fair competition among all types of market players".

In fact, the call to open areas where the market access of non-governmental capital was once banned was made at the 16th National Congress of the Communist Party of China in November last year. The Congress also called for measures to realize fair competition in financing, taxation, land use and foreign trade. Accordingly, the government has promised to scrap all rules and regulations designed to ban non-governmental capital and introduce equal treatment to enterprises in all sectors of the economy with regard to market access, land use, taxation, listing on the stock market and import and export. In a word, all areas opened to foreign capital will be opened to Chinese non-governmental capital.

The opening of the restricted areas to private capital is the natural outcome of the rising political status of personages in the private sector. Since last winter and this spring, a large number of entrepreneurs and other personages have ascended the political arena. Their appearance in the top advisory body and legislature this year has caught even greater attention.

Analysts here believe that the opening of "restricted sectors" means great encouragement to the non-public sector.

However, some private entrepreneurs are still cautious with their investment.

"Despite the good policies, it is still inadvisable to rush headlong into these areas," said Xia Shilin, president of the private Shenghua Holdings Group and a deputy to the 10th NPC. "It is necessary to study these areas carefully and do what we can do."

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