Confidence of private enterprises is the key to boosting private investment in China, Premier Li Keqiang said during the State Council executive meeting on June 22.
From the beginning of 2016, the growth rate of private investment has been slowing down, which drew much attention. It was 3.9 percent from January to May, down 7.5 percent year-on-year.
The executive meeting on June 22 offered five instructions to shore up the withering private investment.
The State Council first identified the significance of private enterprises and investment. Premier Li said that private investment is crucial for China to maintain stable economic growth, create jobs and pursue economic reform.
Second, the relationship between government and market will be further clarified in order to build a fair investment environment. Concrete measures for that goal include cutting red tape, polishing laws and regulations, setting up negative lists for market access, opening more investment areas to private enterprises such as civil airports, telecom, and oil and gas exploration.
Third, the meeting decided to further expand reform and effectively implement policies, in order to restore private enterprises’ confidence.
Fourth, the State Council called on Chinese banks to issue more loans to private enterprises and to cut financing costs. And last, it vowed to punish local governments that fail to sign contracts with private enterprises and implement policies.
“These measures are specific to the problems that private enterprises face,” said Li Jin, chief researcher at the Chinese Institute of Corporation.
At the end of May, the State Council dispatched nine inspection teams to survey the situation of private investment in different regions. Problems uncovered during this inspection include discordant regulations, low performance levels of some local governments, unfair treatment faced by private enterprises compared with State-owned ones, and high financing costs.
During the executive meeting, Premier Li urged governments at all levels to pay attention to the problems that private enterprises face. He emphasized that policies and reform should be firmly implemented to boost the confidence of private enterprises.