Pri­vate en­ter­prises should not ‘exit the econ­omy’

China Daily European Weekly - - Com­ment - The ar­ti­cle was first pub­lished in Beijing News. The views do not nec­es­sar­ily re­flect those of China Daily.

busi­nesses, with a reg­is­tered cap­i­tal of 165 tril­lion yuan ($24 tril­lion; 20 tril­lion euros; £18.3 tril­lion). The pri­vate sec­tor now ac­counts for more than 60 per­cent of China’s GDP.

True, State-owned en­ter­prises en­joy some ad­van­tages when it comes to the in­dus­trial chain, cap­i­tal and li­cens­ing. But the pri­vate sec­tor em­bod­ies the en­tre­pre­neur­ial tal­ent and spirit of the Chi­nese peo­ple. Its abil­ity to adapt to mar­ket changes re­flects its efficiency, which in turn helps the SOEs grow big­ger and more pow­er­ful. As such, the forced demise of the pri­vate sec­tor would lead to in­ef­fi­cient re­source al­lo­ca­tion, af­fect­ing the over­all de­vel­op­ment of China’s econ­omy.

The 18th Na­tional Congress of the CPC in late 2012 ad­vo­cated that eco­nomic en­ti­ties un­der var­i­ous own­er­ship should be guar­an­teed equal use of the fac­tors of pro­duc­tion ac­cord­ing to law, fair par­tic­i­pa­tion in mar­ket com­pe­ti­tion and equal le­gal pro­tec­tion.

A year later, the Third Plenum of the 18th CPC Cen­tral Com­mit­tee said that China, by and de­velop the pub­lic sec­tor, and “un­wa­ver­ingly” en­cour­age, sup­port and guide the de­vel­op­ment of the non­pub­lic sec­tor.

He also re­it­er­ated the lead­er­ship’s “un­changed” at­ti­tude to­ward the non­pub­lic sec­tor vis-a-vis the sta­tus and role of the non­pub­lic sec­tor in China’s eco­nomic and so­cial de­vel­op­ment; the pol­icy of en­cour­ag­ing, sup­port­ing and guid­ing the de­vel­op­ment of the non­pub­lic sec­tor; and the pol­icy to cre­ate a fa­vor­able en­vi­ron­ment and cre­ate more op­por­tu­ni­ties for the de­vel­op­ment of the non­pub­lic econ­omy.

These as­sur­ances have fur­ther boosted the con­fi­dence of pri­vate en­ter­prises, en­cour­ag­ing them to play a vi­tal role in China’s eco­nomic trans­for­ma­tion and fu­ture de­vel­op­ment.

In a re­port de­liv­ered to the 19th Party Congress late last year, Xi said China must up­hold and im­prove its ba­sic so­cial­ist eco­nomic and dis­tri­bu­tion sys­tems, re­it­er­at­ing the lead­er­ship’s “un­wa­ver­ing” stance. He also said the coun­try will sup­port the de­vel­op­ment of pri­vate en­ter­prises, in an ef­fort to achieve higher-qual­ity and more ef­fi­cient and sus­tain­able de­vel­op­ment. More­over, China has im­ple­mented a se­ries of pol­icy mea­sures to en­cour­age non­govern­men­tal in­vest­ment and pro­mote the healthy de­vel­op­ment of en­trepreneurs, which have helped cre­ate a fairer, more open and more re­laxed en­vi­ron­ment for the de­vel­op­ment of the pri­vate econ­omy.

China has an enor­mous pro­duc­tive force. But to in­crease pro­duc­tiv­ity and pro­mote the build­ing of a com­mu­nity with a shared fu­ture for mankind, Chi­nese en­ter­prises, both pub­lic and pri­vate, need to “go global”. As an im­por­tant part of China’s econ­omy, pri­vate en­ter­prises can adapt to the rules and pace of eco­nomic glob­al­iza­tion faster than the SOEs. Which means the pri­vate sec­tor can­not and should not be al­lowed to die an un­nat­u­ral and un­timely death.

As such, the ab­surd ar­gu­ment of the con­tro­ver­sial ar­ti­cle should be seen more as po­lit­i­cal spec­u­la­tion than an in­sight into China’s eco­nomic re­al­ity.

They are not only cru­cial, but can also adapt to the rules and pace of eco­nomic glob­al­iza­tion faster than China’s SOEs

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