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China to expand market access for private investment: Premier

(Xinhua)
Updated: 2009-12-28 15:51

Private investment should be allowed in any sector that government policies and regulations did not prohibit, said Chinese Premier Wen Jiabao Sunday.

Wen was speaking exclusively to Xinhua News Agency at Ziguangge building inside Zhongnanhai, an office compound of the central authorities at the heart of Beijing.

Wen said the key was to build the market confidence and expand market access for private enterprises, and called for maintaining the continuity and stability of policies to encourage investment from private firms.

The vigorous growth of private firms demonstrated the sound shape of the whole economy, and was a reflection of the vigor and confidence of a country, said Wen.

He said China should adhere to the principle of encouraging the private economy while developing the public economy as the pillar.

Private enterprises, mainly in the service sector, played an important role in creating jobs, and the government should support private firms, mainly small and medium-size enterprises (SMEs), through favorable tax and credit policies, said Wen.

China has more than 4.3 million SMEs, which account for 99 percent of registered enterprises, and contribute 58.5 percent of GDP, 50 percent of tax revenues, 68 percent of exports and 75 percent of new jobs every year, according to the China Association of Small and Medium Enterprises.

Wen also stressed the role of migrant workers, returned students from abroad and college graduates in promoting private investment.

China's response to the financial crisis went well beyond the 4-trillion yuan ($585.6 billion) stimulus package, and China would also use its government investment to spur private investment, which was even more important, said Wen in March.

In 2009, the government earmarked 10.89 billion yuan from the central budget to support SME development, more than doubled the 4.99 billion yuan allocated in 2008.

However, private firms suffered from financing difficulties that stemmed from banks' reluctance to lend to SMEs, which were often deemed more risky than large state-owned companies, said Chen Yongjie, a researcher with the All-China Federation of Industry and Commerce, earlier this month.

The government agreed at the Central Economic Work Conference in early December to boost the abilities of the private economy to create jobs and compete in the market, to relax market access for private investment and protect the legitimate rights and interests of private investors.