Government must rev up private investment engine

China’s private investment increased by 8.4 percent year-onyear in the first quarter of 2022, higher than the average growth rate in the whole of last year. Private investment in manufacturing during the period grew by 24.8 percent, statistics from the National Development and Reform Commission shows.

The rebound of private investment reflects improved expectations among market players and the continued resilience of the economy.

Investment remains the cornerstone of China’s economy. The country should give play to the driving role of government investment to leverage more private investment.

The policies supporting private investment have improved, but some sectors are not fully open to private investors and institutional transaction costs are high too.

The key to boosting private investment is to boost the confidence of market players by letting them see reasonable investment returns.

The authorities should strengthen the building of a soft environment for investment, setting up an investment-friendly governmentbusiness relationship and creating a fair, transparent, predictable and legalized business environment. It should delegate power, improve regulation and services, and particularly strengthen protection of the legitimate rights and interests of private enterprises in accordance with the law to stabilize the expectations of private entrepreneurs. The “last-mile” problem should be resolved for private investment to stimulate the investment and entrepreneurship vitality of private capital and its potential for innovation.

Institutional barriers should be removed to lower the threshold for non-governmental investment, and practical measures should be taken to fully implement the negative list system for market access, support private investment in major projects, and expand channels for private capital to enter key sectors.

The country should prompt the financial sector to support private investment, continue to support market-based and law-based debt-to-equity swaps for private enterprises, and make greater efforts to solve the financing difficulties of private enterprises. Measures should be taken to guide banks to increase their credit support for private enterprises, and ensure that policies to cut costs for micro, small and medium-sized enterprises are fully implemented to stimulate private investment.