Private investment ‘ to spike this year’
Government work report will stimulate corporate spending
Private- sector investment in China will pick up this year, due to positive signals from the government work report delivered by Premier Li Keqiang over the weekend during the ongoing two sessions, said former vice president of All- China Federation of Industry & Commerce on Monday.
In an interview on the sidelines of the annual session of the National Committee of the Chinese People’s Political Consultative Conference ( CPPCC), China’s top political advisory body, Zhuang Congsheng, a national committee member, told the Global Times this year’s government work report offered more targeted measures to stimulate private- sector investment than the previous ones.
Regulations will be simplified, and governments’ scope to exercise discretionary power will be reduced, according to the report.
It is the first time that the Chinese government has used its work report to encourage entrepreneurs to make a fortune, which aims to increase businesses’ confidence, said Zhuang.
Fixed- asset investment by private companies in China last year grew 3.2 percent yearon- year to 36.5 trillion yuan ($ 5.3 trillion), slowing from the growth rate of 10 percent registered in 2015, official data from the National Bureau of Statistics showed.
In 2016, private- sector businesses’ confidence in the Chinese economy was dampened by weak domestic demand and rising costs.
“Rising operating costs, es- pecially for labor, are heavily pressuring private- sector companies whose profit margins now ranging from 3 percent to 5 percent, a big drop in comparison with 20 percent in earlier boom times,” said Zhuang.
In a bid to lower corporate costs, 35 administrative charges paid by enterprises to the central government will be abolished or suspended, and government- set operating fees for businesses will also be cut, according to the government work report.
Zhuang said that this isn’t enough and policies should be announced that will make companies really feel the difference.
High taxes and fees are still drawing many complaints from Chinese entrepreneurs during the ongoing two sessions.
However, Li Zhantong, an entrepreneur from North China’s Tianjin and a CP- PCC member, told the Global Times Monday that shrinking profit margins may also be a good thing, to some extent, because they can force companies to seek new growth points through internal upgrading and innovation.
Li also believed that private investment this year would rise if the measures in the government work report are efficiently and thoroughly implemented.
Zhang Yong, a vice chairman of the National Development and Reform Commission, told a press conference in Beijing on Monday that China will take further steps to drive up private investment through public- private partnerships ( PPPs).
In 2017, the central government budget projected 507.6 billion yuan of investment to expand PPPs to guide more investment into initiatives.