MILESTONE POLICY TO BREAK FINANCING BOTTLENECKS

Initiative is set to promote supply-side structural reform, improve services and boost investment

The central government regards reform of investment and financing systems as one of the top priorities of supply-side structural reform in the near future, aiming to help resolve financing difficulties faced by the private sector, especially small and medium-sized enterprises.

Since the beginning of the year, China’s private fixed-asset investment growth has continuously declined from a double-digit rate last year, triggering serious public concern and heated discussions among policymakers and scholars.

Data from the National Bureau of Statistics showed that from January to June, the growth rate of private fixed-asset investment hit a historical low of 2.8 percent on a year-onyear basis.

The State Council, China’s Cabinet, has paid great attention to that worrying trend. In late May, it sent nine special inspection groups to research the private investment situation in 18 provinces and regions, and entrusted three third-party organizations to make independent evaluations on the issue.

At a July 15 news briefing releasing economic data for the year’s first half, NBS spokesman Sheng Laiyun said that the special inspection initiative in May revealed several reasons for the decline of private investment.

The investigation found that the difficulty and high cost of financing is a major problem that private enterprises face amid the economic downturn, and some of them have gone bankrupt as a result.

At the executive meeting of the State Council on June 22, Premier LiKeqiang reviewed a special report compiled after the private sector inspection initiative, and required further reform to boost the morale of private investors.

The State Council issued a document on July 4 to further promote private investment. The alleviation of financing difficulties facing private enterprises has been listed as one of the most important measures needed to ease the situation.

Following a series of actions and measures to deal with the problem, a major document deepening reform of the investment and financing system came out on July 18. It was the first such document released by top Party and government authorities since the beginning of the country’s reform and opening-up drive more than 30 years ago, said Zhang Yong, vice-minister of the National Development and Reform Commission, the country’s top economic planner.

“The document is the top-level design in the field of investment and financing to promote supply-side structural reform now and in the coming years,” Zhang said at a news briefing on July 25.

Zhang also pointed out several highlights of the document aimed at breaking investment and financing bottlenecks, especially in the private sector, through streamlining administration and delegating administrative power to the lower levels, improving efficiency and reducing cost, as well as launching innovative financial measures.

To enhance government services, and promote investment and financing, the new reform makes an attempt to explore and establish a mechanism in which the first government department accepting the application for an investment project is responsible for entire examination and approval process, thus facilitating enterprises’ investment activities.

Moreover, some provinces such as Guangdong and Zhejiang are exploring the possibility that some market-oriented investment projects not concerning such key issues as environmental protection, could be carried out without first undergoing the examination and approval procedures. This is expected to be adopted in more areas nationwide.

An assessment intermediary service will be launched to guarantee both the feasibility and security of investment projects and the efficiency of enterprises’ investment.

An examination and approval supervision platform for investment projects will also be established to provide more convenience for enterprises.

In addition, a significant part of the document is about encouraging direct financing from the securities market through further financial system reform.

“The document intends to increase the ratio of direct financing and broaden direct financing channels to enable enterprises to have more access to capital with lower costs,” said Xu Kunlin, deputy secretary-general of the NDRC.

In the middle of July, seven inspection groups sent by the State Council started a new round of private investment inspection in seven provinces and regions where the private investment growth rate has dropped sharply in recent months.

At the July 27 executive meeting that Li presided over, it was decided that further measures would be taken to provide more efficient financing services to small and micro enterprise to solve their financing difficulties.

WANG XIAOYING / CHINA DAILY