Key questions in developing non-public economic sectors: interview

Home>>Opinion

Last updated at: (Beijing Time) Tuesday, November 18, 2003

Key questions in developing non-public economic sectors: interview

The non-public sectors of the Chinese economy, while having gone through depression and prosperity, have also left their forward-march footmarks in China's reform and opening up program.

DISCUSSION

CHINESE

SEND TO FRIEND

The non-public sectors of the Chinese economy, while having gone through depression and prosperity, have also left their forward-march footmarks in China's reform and opening up program. Article 5 of the CPC Central Committee's "Decision on Some Issues Concerning Improvement of the Socialist Market Economic System", passed by the Third Plenary Session of the 16th CPC Central Committee, specially expounded the need to "vigorously develop and actively guide non-pubic economies". In the crucial period of reform, this exposition put forward a new idea about the operation of the non-public economy and cherished expectations of the prospect of the socialist market economy.

In an interview with People's Daily Online reporter Wang Dan, Mr. Zhang Zhuoyuan, an economic expert from the Chinese Academy of Social Sciences, answered questions focusing on developing non-public sectors.

Q: In the CPC Central Committee's "decision", much space was devoted to the exposition of the non-public economy, how to understand the connotative meaning and roles of China's non-public sectors?

A: The non-public economy, which includes individual, private and foreign-funded sectors, is an important component of China's national economy. The rapid development of the non-public economy is a conspicuous phenomenon appeared since the launch of reform and opening up two decades ago, before that the nation was dominated by public ownership, with only 140,000 individual businesses employing 150,000 people, and private sectors were almost completely wiped out. One of the biggest achievements of China's reform and opening up is the rapid development of non-public economies, which was recorded simultaneously with the reform of public sectors and the introduction of a market mechanism, thereby securing an harmonious unity between reform, development and stability.

The existence of the non-public economy is an objective necessity. Up till now, there is no country in the world whose developmental level of productive forces can reach the extent of eliminating the individual economy. China's socialized productivity is not high and is multi-level by nature, the individual economy can play a wide-ranging role in making good omissions and deficiencies and serving as useful supplement. Since the start of reform and opening up, individual and private economies have grown fast, with their contribution to GDP rising from 1 percent in 1979 to over 20 percent in 2001. In some coastal areas, the non-public economy has represented a key factor for economic growth. Besides, the non-public economy has made important contributions to expanding employment, pushing newly rising industries and promoting the structural adjustment and optimization of the ownership system.

Q: It is by no means a plain sailing in the development process of the non-public economy since the introduction of the reform and opening up program, up to now, what are the difficulties we have encountered in the process of developing the non-public economy? How should they be overcome?

A: currently, there still exist some system and policy restrictive factors hindering the development of the non-public economy. Firstly, affected by traditional concepts, some people invariably think that the non-public economy contradicts the socialist economy, they fail to see the fact that under the conditions of socialist market economy, non-public and public sectors can infiltrate and promote each other and make common development. Secondly, discriminatory regulations and policies haven't been removed. Now, relevant stipulations on the protection of lawful private property are still lacking in our Constitution and other laws. In policies there are many restrictions on enterprises' fund-raising and land use and examination and approval formalities are complicated. Thirdly, many government departments haven't shaken off the administration method used under the planned economy and no real social public administration has been introduced.

In addition, although China's individual and private economies have developed very fast, and there have emerged some sizeable and powerful enterprises, in the present period of system transition, however, market development is incomplete, effective competition is inadequate and the overall quality of non-public enterprises remains fairly low. Many companies are still operating under a management system of a family type, the problem concerning the non-standardized market behavior of individual and private enterprises is quite conspicuous, under the circumstances of imperfect market order, some enterprises are seriously defective in their credit; problems relating to safety production and environmental pollution are grave, the existence of such problems as the employment of child labor, embezzlement of wages, and wanton infringement upon workers' legal interests, as well as fake and shoddy products and tax fraud and evasion has hampered the sound development of non-public economic sectors.

In light of the above-mentioned conditions, eliminating structural obstacles and improving the quality of the non-public economy itself is presently an effective way to promote the rapid and sound development of non-public sectors.

Firstly, we should further emancipate the minds and earnestly change our old concepts. We should discard "the theory of the unique importance of class origin" and, based on productive forces as the standard, we should unswervingly encourage, support and guide the rapid and sound development of non-public sectors that facilitate the development of social production at the present stage.

Secondly, we should improve related laws and regulations. The "decision" mentioned above clearly requires that we must sort out and revise laws, regulations and policies that hinder the development of non-public economy, and establish a modern property system so as to help protect private property and boost the non-public economic development.

Thirdly, we should change government functions and improve its service for and supervision over non-public sectors.

And fourthly, we should see to it that individual, private and other non-public economic sectors should work hard to improve their own qualities, engage in legal operation, earnestly keep their social credit, seek survival and development through fair competitions and enhance the efficiency of economic activities, thereby making contributions to the development of the socialist market economy.

Q: Article 5 of the "decision" calls for "relaxing restrictions on market access and allowing non-public capital into infrastructure, public utilities and other trades and fields not forbidden by laws and regulations. Non-public enterprises enjoy equal treatment with other enterprises in financing, taxation, land use, foreign trade and other aspects". Related formulations have given a green light to the non-public economy in a wider field. What's the significance in perfecting the market economy system and how should these be put into practice?

A: the "decision" called for energetically pushing forward and actively guiding the non-public economy, and laid special emphasis on the need to sort out and revise regulations and laws that hinder the development of non-public sectors, and remove system barriers. This can be called a grip on the key link that hampers non-public economic development. The solution of this problem would surely further immensely widen the space for China's non-public economic development and help change the original policies of discrimination against the non-public economic sectors, realize fair competition and advance the market economy system reform.

At the moment we should devote our main efforts to doing the following fields of work well: In all fields into which foreign funds are encouraged, non-governmental funds should also be encouraged. We should reform the investment system by changing discriminatory policies, streamlining approval procedures and reducing administrative fees, so as to change the situation in which individual and private enterprises depended on tips and bribes to get approvals. For industries supported and encouraged by the State, a system of file on records should be established for non-governmental projects. Non-governmental funds should be guided and encouraged to participate in the regrouping and reform of State-owned enterprises, the development of the western region and renovation of old industrial bases in northeast China. Non-public enterprises enjoy equal treatment in financing, taxation, land use, foreign trade and other aspects.

Q: at the Third Plenary Session of the 16th CPC Central Committee, the State and the Party fully affirmed the contributions made by non-public sectors to the national economy. We should say that currently the non-public economy is facing rare opportunities, how do you look at the development orientation and trend of these economic sectors in the future?

A: along with the deepening of economic system reforms and the continuous development of economic socialization and marketization, it is an unavoidable trend that funds of all types mix together in share holding, making public and non-public capitals seep into each other in the modern corporate system. This may be a direction of our non-public economy. Of course the property relations here are clear and private properties are strictly protected by law.

For non-public enterprises, especially private enterprises, it's a wise choice to turn gradually to a shareholding system and corporate system in changing their long-standing family-style management, and embark on the track of the modern corporate system. Statistics show that by the end of 2001, except self-employed business owners, over 90 percent newly established enterprises were stock-holding companies and over 70 percent old enterprises were transformed into stock-holding ones, and enterprises wholly owned by the State or individuals were reducing in number. The fading away of enterprise division by ownership will become an inevitable trend in the economic development.

(Article by PD Online reporter Wang Dan, translated by PD Online staff member Li Heng.)

Questions?Comments? Click here

China's private economy produces US$280.78bln in 2002

Investors encouraged to buy China's big state firms

Non-public sectors conducive to socialist market economy: economist

China slams AIT head's remarks on Taiwan issue ( 4 Messages)

Internet changes life in China: News focus ( 2 Messages)

2003, the first pageant year in China? ( 4 Messages)

US rushes to embrace strategy of "Iraqification" ( 4 Messages)

Traffic woes to ease with express thoroughfares ( 3 Messages)