Premier Li Keqiang inspects the Hangzhou branch of Tailong Commercial Bank in Zhejiang, East China, on Nov 21, 2014. [Photo/Xinhua]
Premier Li Keqiang recently held an executive meeting of the State Council to ensure the implementation of policies to spur private investments.
The State Council is also to carry out inspections on May 20. The inspection team will investigate how the market is reacting to the investment and financing system reform and the reasons for private investment’s slow growth. Two main reasons can be found.
Monopoly of State-owned enterprises constantly pose threats to private investment’s involvement in market activities, such as projects through public-private partnerships (PPP).
The original object of PPP is to set up a cooperation platform for local governments and private capital. But it faces two difficulties: most projects with good returns are given to government financing platforms or State-owned enterprises, while those with less returns are left for private capital; local governments are trying to turn PPP into a financing channel to solve local government debts.
And market entry remains a critical issue. Private enterprises are facing issues of “no door”, which means no one accepts and handles their requests.
Therefore, special funds are now being tested by injecting a set amount of capital into policy guarantee companies to allow them to provide credit for private, small- and micro-sized enterprises and enhance their overall competitiveness.
Measures of this kind are now being adopted to allow more private investments to enter different industries and fields not banned by law or regulations. These measures will strengthen the confidence of local governments and private capital cooperation to further stabilize and promote private investments.