Xi vows pri­vate sec­tor help

SOEs, pri­vate firms both im­por­tant en­gines of growth

Global Times - Weekend - - FRONT PAGE - By Shen Wei­duo

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.

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