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Government signals need to expand private investment

Updated: May 11,2016 11:27 AM Daily

Premier Li Keqiang stressed measures to implement policies to increase private investment twice in less than a week, signaling that the government has attached great importance to the issue and that there are opportunities for private investment to find ways to grow.

A State Council executive meeting presided over by the Premier on May 4 decided on expanding private investment, and sent a supervision group to find the problems that affect the growth of private investment.

At a meeting on streamlining administration and delegating power on May 9, the Premier urged to work out a negative list of industry access to help private investment into the industries such as electricity, telecommunication, transportation, gas and petrol, public utilities, senior caring and education.

He also asked to remove the additional and discriminatory conditions set for private investment, and treat private and public enterprises equally to protect their legal rights.

Data shows that private investment has been a major driving force for the Chinese economy, as its proportion of total investment had increased to 61.4 percent from the 49.8 percent during the period from 2006 to 2012. And by 2015, the number increased to 64.2 percent.

However, there are concerns because the country’s private investment decreased this year, a rare situation in the last 10 years. In the first quarter, private investment only took up 62 percent of total fixed-asset investment, down three percentage points from to the same period last year and down 2.2 percent compared to last year.

The government’s policy is a timely measure to promote the increase of private investment, and if private funds can be utilized in more fields, it would be big help for stable economic growth, structural adjustment, supply-side reform and employment promotion.

To expand private investment, the government also needs to remove various investment barriers for private enterprises, and create a fair competitive environment. The most important thing is to effectively implement policies released by the State Council to spur private investment.