Push to raise private stake in monopolies

By Ji Beibei

Private companies and individuals on the Chinese mainland may soon be able to increase the percentage they invest in five monopoly industries under a proposal backed by the State Council, the Hong Kong-based Wen Wei Po reported yesterday.

The National Development and Reform Commission (NDRC) submitted the proposal to the council that argues for private investors to be able to invest larger sums in the industries.

The plan also calls for the government to lower the qualification threshold.

The proposal was drafted in April and is likely to be implemented before the end of the year.

The proposal, if accepted, will officially authorize more private capital to flow into the five monopoly industries: finance & insurance, including banks, public facilities such as the telecommunication industry, infrastructure such as railway construction, and education and health, an NDRC official said.

The proposal offers suggestions on how to improve financial services targeting non-public enterprises and lower the tax burden on those enterprises, the 21st Century Business Herald reported Wednesday.

The proposal also calls for a gradual increase in the amount of private loans.

Many felt the proposal is a positive move.

"It is beneficial on both sides to help reduce non-monopolistic competition while increasing the competition in monopoly industries," Du Xiaoshan, an expert at the Chinese Academy of Social Sciences, told the Global Times yesterday.

"It can help push the structural reform of large-scale State-owned enterprises forward and bring about a state of multi-profits," Du said.

If fully implemented, the Chinese economy would no longer have to depend solely on the success of State-run investment and China will have a more balanced and continuously growing economy, Ha Jiming, the chief economist of China International Capital Corporation Limited, told Wen Wei Po yesterday.

"I might consider investing in railway construction if the policy is carried out," said Liang Jianyou, president of China Jodoll Group, a Zhejiang-based private enterprise. His business is involved in textile, garment, investment and real estate.

Job seekers may also benefit from the move, some experts pointed out.

"Private enterprises provide more than 75 percent of the jobs presently. If the proposal achieve its desired effect, more jobs will be created because more investment room will be given to private capital," said Liu Yingqiu, another expert from CASS.

There are also risks involved, said Du.

"Regulation and guidance is called for when private loans enter the market. Illegal market practices, such as illegal fundraising, should be prevented, " Du said.

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