Govt wants private sector boost

08:44, May 14, 2010      

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The central government released guidelines on further encouraging private investment in a wider range of key industries, a move indicating the authorities are placing more importance in private investment's role in sustaining economic growth.

But analysts doubt whether the guidelines are workable and to what extent they can be enforced.

The State Council published the guidelines stating that the Chinese government will make efforts to create "a fair and transparent environment" for private investment and "enlarge the scope for entry of private investment".

The government will encourage private investment to enter infrastructure sectors including transportation, water, oil, natural gas, power, mining and telecommunications, according to the statement.

And private investment is also encouraged to flow into public utilities, social utilities, financial services, commerce and trade and defense.

"The guidelines signal that the Chinese government is attaching greater importance to private investment as the nation has realized it will have to rely more on the private enterprises to maintain sustainable economic growth, rather than State-owned enterprises," said Li Xiaogang, director of the Foreign Investment Research Center at Shanghai Academy of Social Sciences.

But "I am more concerned about detailed measures on how to implement the guidelines. I really hope the guidelines are not merely empty words".

Compared with guidelines issued in 2005 which only outlined the sectors that the private enterprises are allowed to enter, the new ones provide more detail, such as how to invest and what projects they can get involved in. And the new edition emphasizes that the government will further encourage them to do so.

Calls for the further development of the private investment have been rising in recent years.

Premier Wen Jiabao said late last year: "Prosperous private investment in a nation is a symbol of its economic development, and also a reflection of the nation's energy and confidence."

And in March, the State Council released four measures to encourage private investment.

But some experts claimed that the enforcement of the guidelines issued in 2005 was actually unsatisfactory as there was a lack of coordination and few details on how to implement them.

"How to translate these words into action is an urgent task," said Li.

Despite creating a large number of jobs, private enterprises still have a low profile in China's key industries.

By the end of 2008, private enterprises had 14, 10, 8, 8 and 7 percent market shares of China's electricity, finance, telecommunications, transport and water industries respectively.

Source: China Daily

(Editor:黄硕)

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