Market, not government, must decide the future of SOEs and private firms

GIVEN THE SLOWER ECONOMIC GROWTH, people are debating whether China should divert more resources and energy from supporting the development of private businesses to shoring up Stateowned enterprises. Guangming Daily comments:

To some people, private and public economies seem antagonistic, as many argue that the private sector has fulfilled its “historical mission” over the past 40 years and therefore it should exit the national economy. Which is against the spirit of the Constitution that fully recognizes the legitimacy, necessity and importance of the private economy.

It is true that some private enterprises face difficulties caused by both internal and external factors, especially those in the middle and lower rungs of the industrial chain, and China is seeking to strike a new dynamic balance in its economic and industrial structures.

But that doesn’t mean China will abandon its policy of bolstering the private economy. That’s why the authorities have promised to take measures — granting easier access to financing and easing their tax and fees burdens — to help the private enterprises to tide over the difficulties.

All enterprises are equal before the law. So there is no reason for some people to discriminate against private companies. Let’s not forget that the private sector remains the major contributor to growth, value added, jobs, innovation and tax revenues.

There is no need for private and State-owned enterprises to be engaged in a life-or-death struggle, because as competitors, they can boost industrial upgrading and economic efficiency.

The existence or disappearance of certain enterprises or industries are, in most cases, the result of market competition, not the government’s decisions. The government is obliged to protect the rights and interests of all lawful enterprises irrespective of their ownership.

It does not make sense to urge the government to act beyond its authority to interfere with the market’s operation. The market, not the government, should play a decisive role in allocating resources.