NEW WAVE OF MEA­SURES TO BOOST PRI­VATE IN­VEST­MENT Gov­ern­men­tal ser­vices will be im­proved with fo­cus on pro­jects

China Daily (Hong Kong) - - POLICY REVIEW - By HU YONGQI huy­ongqi@chi­

Though pri­vate in­vest­ment growth bounced back in the past few months, eco­nomic development de­mands a greater in­crease from the sec­tor to in­vig­o­rate em­ploy­ment and mar­ket vi­tal­ity.

That is why a slew of mea­sures were re­leased to boost pri­vate in­vest­ment after a State Coun­cil ex­ec­u­tive meet­ing, presided over by Pre­mier Li Ke­qiang on Fri­day.

The meet­ing called to fur­ther stream­line ad­min­is­tra­tion and im­prove gov­ern­men­tal ser­vices, by mak­ing it eas­ier for pri­vately in­vested pro­jects to get ap­proved, ac­cord­ing to a state­ment re­leased after the meet­ing.

El­i­gi­ble pro­jects should be ap­proved in des­ig­nated time after pro­jects are checked by de­part­ments un­der the State Coun­cil and lo­cal gov­ern­ments.

Pri­vate com­pa­nies were en­cour­aged to par­tic­i­pate in the “Made in China 2025” strat­egy, fo­cus­ing on mod­ern agri­cul­ture and tech­ni­cal up­grad­ing.

A mech­a­nism will be estab­lished to en­sure rea­son­able re­turns for pri­vate in­vestors when they take part in publicpri­vate-part­ner­ship pro­jects in ar­eas such as in­fra­struc­ture and pub­lic ameni­ties.

A credit eval­u­a­tion sys­tem will also be im­proved and pri­or­i­tize credit man­age­ment, pro­vid­ing mul­ti­ple fi­nan­cial ser­vices such as cir­cu­lar loans. Fi­nan­cial in­sti­tu­tions will be pro­hib­ited from re­quir­ing ad­di­tional con­di­tions when grant­ing loans.

The meet­ing en­cour­aged lo­cal gov­ern­ments to set up funds to com­pen­sate for credit risk, which will in­crease sup­port for small and medium-sized en­ter­prises and tech­no­log­i­cal star­tups. Stricter man­age­ment will be con­ducted to con­trol fees charged on com­pa­nies and re­duce in­sti­tu­tional costs for the en­ter­prises.

In ad­di­tion, spe­cial checks will be con­ducted to re­view whether lo­cal gov­ern­ments have kept their prom­ises to pri­vate in­vestors, in ac­cor­dance with laws and reg­u­la­tions. Any gov­ern­men­tal be­hav­ior that ham­pers the le­git­i­mate rights of these en­ter­prises will be pun­ished, the state­ment added.

“These mea­sures fo­cus on key prob­lems pri­vate in­vestors are fac­ing; I be­lieve ef­fec­tive pri­vate in­vest­ment will be boosted,” said Han Zhifeng, deputy di­rec­tor of the in­vest­ment depart­ment of the Na­tional Development and Re­form Com­mis­sion.

Pri­vate in­vest­ment has been a fo­cus of the cen­tral gov­ern­ment and the pre­mier, who is com­mit­ted to re­duc­ing in­sti­tu­tional costs and boost­ing fi­nances for en­ter­prises. On June 18 last year, the pre­mier chaired a meet­ing to boost growth in the area.

“Pri­vate in­vest­ment can strongly spur con­sump­tion and em­ploy­ment. It also con­cerns eco­nomic growth and re­struc­tur­ing,” he said at the meet­ing.

Pri­vate in­vest­ment has con­trib­uted about 60 per­cent of the coun­try’s to­tal in­vest­ment and cre­ated 80 per­cent of em­ploy­ment op­por­tu­ni­ties. It in­creased by 7.2 per­cent dur­ing the first half of this year, 4.4 per­cent­age points higher than the first half of last year.

How­ever, ex­perts said pri­vate in­vestors have been fac­ing chal­lenges such as fi­nanc­ing dif­fi­cul­ties and bro­ken prom­ises by lo­cal gov­ern­ments. In the first six months, pri­vate in­vest­ment in in­dus-

Pol­icy di­gest

trial pro­jects in­creased by 5.1 per­cent, slower than the to­tal pri­vate in­vest­ment.

Some fa­vor­able poli­cies to sup­port pri­vate in­vest­ment have not been fully im­ple­mented and rel­e­vant de­part­ments should clear and re­vise out­dated rules and reg­u­la­tions, Li Yizhong, deputy di­rec­tor of the eco­nomic com­mit­tee of the Chi­nese Peo­ple’s Po­lit­i­cal Con­sul­ta­tive Con­fer­ence, was quoted by Xin­hua News Agency as say­ing.

The mech­a­nism to en­sure re­turns for PPP pro­jects was one of the most eye-catch­ing points made dur­ing the meet­ing, said Wang Manchuan, sec­re­tary­gen­eral of the China So­ci­ety of Ad­min­is­tra­tive Re­form.

Pub­lic-pri­vate-part­ner­ship has be­come a vi­tal way to con­nect China’s mas­sive in­fra­struc­ture build­ing with pri­vate in­vest­ments since 2014. By the end of March, the coun­try had an­nounced 700 pub­lic-pri­vatepart­ner­ship pro­jects that at­tracted in­vest­ment of 1.7 tril­lion yuan ($248 bil­lion).

The suc­cess of PPP de­pends on rea­son­able re­turns and re­duc­ing risk, said the 2007 No­bel lau­re­ate Eric Maskin when he at­tended the Dameisha China In­no­va­tion Fo­rum in Novem­ber in Shen­zhen, Guang­dong prov­ince.

Rea­son­able re­turn is key in pro­mot­ing pub­lic-pri­vatepart­ner­ship as pri­vate in­vestors or com­pa­nies have to carry out these pro­jects over the long term but ac­tu­ally earn a low in­come each year, which also im­poses ex­tra fi­nan­cial risks for con­trac­tors, said Yan Zhi­jun, a 45-year-old con­trac­tor for drainage pipes in Chaohu, An­hui prov­ince.

“These poli­cies tar­get safe­guard­ing our in­ter­ests and I be­lieve it will be done if prop­erly im­ple­mented by lo­cal gov­ern­ments,” Yan added.

These mea­sures fo­cus on key prob­lems...” Han Zhifeng, deputy di­rec­tor of the in­vest­ment depart­ment of the Na­tional Development and Re­form Com­mis­sion


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