Private firms encouraged to grow
(China Daily)
Updated: 2005-03-12 08:55

Huang Peijin received some good news from the Ministry of Agriculture two days ago.

His company, Hainan Shen Nong Da Feng Seed Technology Holding Co, will receive 2 million yuan (US$240,000) in government funding to set up super hybrid rice seed cultivating bases in Hainan and Hunan provinces this year.

"In the past, only State firms had the privilege of getting government funding to promote high-yield seeds," Huang said.

The sudden change in fortune, albeit government hand outs, comes after Premier Wen Jiabao said he sought to encourage the growth of the non-public sector at the opening ceremony of the third session of the 10th National People's Congress (NPC).

The premier also told NPC deputies the government will "conscientiously implement" the document issued earlier by the State Council to allow private companies to invest in sectors that used to be monopolized by State firms. The sectors include telecommunications, electricity and the national defence industry.

"Two million yuan is not a huge sum of money compared with the total amount needed to finance my projects on R&D and marketing of super hybrid rice, but it carries special meaning," said Huang, who is also an NPC deputy.

"It implies we can compete with State firms on an equal footing. I hope it will be a good start so that I can contribute more to increasing the nation's grain output."

Many deputies from the non-public sector, like Huang, hailed the central government's policy support a "breakthrough" in the development of the non-public sector, which is an important driving force of the economy.

"It is a signal that the central government trusts private entrepreneurs," said Gao Dekang, president of Bosideng Corp Ltd.

"By absorbing a huge number of rural labourers, the private sector can help relieve the nation's employment pressure," Gao said.

Bosideng, one of the nation's largest down-jacket makers, has created 12,000 jobs for Gao's hometown near Changshu, East China's Jiangsu Province.

However, deputies and analysts also urge the government to step up making concrete measures to implement the document.

"The key is how to put the document into practice," said Wang Tian, president of Bu Bu Gao Chainstore Co Ltd.

"Any good policy will mean nothing in the end if local governments at different levels are not exercising it," he added.

Different government departments that oversee the various industries should draft concrete regulations on market access, the deputies said.

Xiao Zhuoji, a renowned economist, said the government should also broaden the financing channels for private enterprises.

"Capable private companies should be encouraged to go public and allowed to issue corporate bonds," Xiao was quoted as saying by Xinhua News Agency.

Getting financing is most difficult for private firms in China, as most banks lend only against tangible collateral, mainly property.

"Private companies have to go through very complicated procedures to get loans. And finally the amount of loans we get are usually only 30-40 per cent of the worth of the collateral. That is our biggest headache," said Ren Yuqi, president of Jinqiao Group.

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