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China strives to expand private investment

Updated: May 5,2016 5:15 PM     english.gov.cn/yicai.com

The executive meeting of the State Council on May 4 decided to carry out inspections of the implementation of policies on private investment incentives with the goal of expanding such investment in China.

Apart from the internal checks performed by related departments in different regions, the State Council will send an inspection team to check the implementation of policies in some regions, with a focus on documents released in 2014 that have encouraged social investment in key innovation sectors. A third-party evaluation will be also carried out toward the implementation of incentives in encouraging private investment, the meeting said.

According to data from the National Bureau of Statistics, the country’s private investment rose in the first quarter by only 5.7 percent, down by 3 percentage points from the same period last year.

One of the reasons for private investment decline is that such investments require returns and avoid projects and sectors with high risks, said Li Zuojun, a researcher from the Development Research Center of the State Council. Meanwhile, private investment faces fewer investment choices, compared to State-owned and government investment, and it has difficulties in financing, which also contributed to the decline, said Li.

“What bothered me most is that we private investors are not treated the same as our public counterparts, and we still face too many restrictions,” said a private entrepreneur who requested anonymity.

Economic growth in central and western regions of China depends more on State-owned investment, and the eastern regions depend more on private forces, said Zhuo Yongliang, deputy director of the Zhejiang provincial Research Society for Economic System Reform. However, even in Guangdong province, with more private investment in real estate, incentives are needed to encourage private investment in more sectors, such as industries and infrastructure.

The comprehensive examination of policies on private investment incentives is to be completed by the end of the month and is expected to keep steady the momentum of China’s private investment growth.

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