Xi vows private sector help

SOEs, private firms both important engines of growth

Chinese President Xi Jinping said on Thursday that China will unswervingly support the development of the country’s private sector, and will continue to strengthen the public sector amid concerns over the development of private enterprise in China.

“We will create a sound legal environment and further improve the business environment for private companies,” Xi said during a visit to China Zhongwang Hold- ings Limited in Northeast China’s Liaoning Province on Thursday.

Xi pointed out that many of the country’s reform efforts are aimed at further developing the private economy and urged private companies to have confidence.

“We will unswervingly develop the public sector and will unswervingly encourage, support, guide and protect the development of the private sector,” Xi said.

“The Communist Party of China’s policies are favorable to the development of private companies,” Xi said. “Private enterprise owners should also spare no efforts in developing more first-rate products.”

The president’s comments come at a time when a debate on the relationship between the country’s State-owned enterprises (SOEs) and private firms continues to gain traction among the public, leading to rising concerns over the fate of China’s private sector.

Over the past months, re-

marks like “the State sector advances at the cost of the private sector” and “China’s private sector had completed its historic mission in assisting the leap forward of SOEs and should be phased out” have resonated on Chinese social media.

During a visit to a subsidiary of China National Petroleum Corporation in Liaoning earlier on Thursday, Xi stressed that talks and arguments about getting rid of SOEs or diminishing SOEs are “wrong and onesided.”

“Any thoughts or remarks that doubt and badmouth SOEs are wrong,” he said.

China will continue its basic economic system, with public ownership playing a dominant role and diverse forms of ownership developing side by side, said the president.

Govt support

Businesspeople from the private sector have expressed concerns. A manager surnamed Zhang of a Shenzhen-based papermaking company told the Global Times on Friday that the private sector is facing difficulty during China’s economic reform.

“Many of the private companies are facing uncertainties brought about by the China-US trade frictions, and the private sector is suffering more than SOEs,” Zhang said.

“We are quite worried about the break of the capital chain, since banks are cautious in granting loans, especially to small companies,” he said.

“Private companies are facing financing problems amid a downward pressure in the domestic economy, and they are among the first to feel the pinch from the government’s deleveraging efforts and financial reform. It’s understandable that they may have low expectations,” Liu Shijing, vice chairman of the China Development Research Foundation, told the Global Times at a forum hosted by the Chinese Academy of Social Sciences on Friday.

China’s central government has repeatedly stressed that it would offer greater support for the private sector. On Friday, during a visit to East China’s Zhejiang Province, Chinese Premier Li Keqiang said that “We will roll out more policies to create a better and more stable market for private enterprise.”

Liu said that to boost confidence in the private sector, government sup- port should be commensurate with the private firms’ contributions to the Chinese economy.

“The sector now contributes more than 60 percent to China’s GDP growth. We could grant loans to them at the same level to address the financing problems,” he said.

Since the reform and opening-up began in the late 1970s, private businesses have assumed a greater role in driving growth. The sector now contributes more than 60 percent to China’s GDP growth and provides over 80 percent of the jobs, Xinhua reported.

“The private sector has brought remarkable vitality to China’s economy, and the SOEs’ significance in maintaining stable economic growth should also be valued,” Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Friday.

“Aside from relying on government support, some private companies should also accelerate their investment in innovation and avoid extensive growth, which will do them no good in the long run,” Cong said, noting that the innovation-driven growth model will benefit them in the long run, as well as China’s economy.