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Members: Private firms need support, understanding
By Hu Qihua and Tang Min (China Daily)
Updated: 2004-03-10 11:26

Both China's top legislators and advisers appealed to the public Tuesday to cut private businesses and the rich some slack while calling for a sound institutional environment for the development of the private sector.

Li Yining, honorary vice-chairman of the China Democratic League (CDL) and vice-chairman of the Economic Committee of the Chinese People's Political Consultative Conference (CPPCC), said yesterday that private businesses are playing an increasingly important role in creating jobs and driving the economy forward.

"Some people become rich first and then they can help others get rich," said Li, criticizing the belief that rich people make others poor.

By the end of November 2003, the number of China's private enterprises was 2.97 million with a registered capital exceeding 334.7 billion yuan (US$40.5 billion). The private sector contributes to half of China's national economic growth.

In Beijing, for example, private businesses provide more than 4.17 million jobs or 61.2 per cent of the total.

During the on-going annual session of the 10th National Committee of the CPPCC, another debate on the so-called "original sin" of private enterprises aroused the top advisers' concern.

An official document in North China's Hebei Province released earlier this year says authorities should not prosecute bosses of private firms if crimes committed in the initial stages of business exceed the statute of limitations stipulated in the Criminal Code.

"Original sin" here is linked to the private sector, referring to crimes and irregularities committed by private entrepreneurs during the initial development of their businesses in the 1980s and includes tax evasion, bribery, illegal money-raising and making shoddy products.

"The document is a positive gesture," said Liu Jiachen, a member of 10th National Committee of the CPPCC, adding that the document aims to remind relevant departments of the stipulation in the Criminal Code.

Liu said that according to Chinese criminal law "authorities cannot prosecute anyone if their crime has outlived the validity period."

"And it is, of course, applicable to private entrepreneurs," he said. The law says the statute of limitation for crimes carrying a maximum penalty of no more than five years' imprisonment is five years; 10 years for crimes that attract imprisonment of more than five years but less than 10; and 15 years for crimes carrying a maximum penalty of 10 years or more. If the maximum punishment for a crime is life imprisonment or death penalty, the statute of limitation is 20 years; after 20 years, prosecutors must get approval from the country's top prosecutors' office. Liu said that if private entrepreneurs are investigated even if their irregularities exceeded the statute of limitation, stiff actions will do society no good since many private companies have grown large, hired many employees and contributed greatly to the country.

However, Liu said that only law-abiding private enterprises can make long-term profit.

Top legislators and advisers, meanwhile, vowed to shake off obstacles in market access and financing as well as heavy tax burdens in the development of the private sector of the economy.

Wang Yiming, member of the Standing Committee of the National People's Congress, China's top legislative body, said many Chinese private entrepreneurs are most concerned with the lack of a transparent schedule for industries barred from private investment, such as civil aviation and oil.

Wang, also vice-chairman of the All-China Federation of Industry and Commerce, said a muddy attitude by the government will add to private enterprises' costs for development. For example, related government departments recently approved the establishment of the country's first private civil aviation company in the vacuum of the opening-up policy of the industry.

"Will there be green light for others waiting in the queue? No one knows," he said.

Yin Mingshan, a member of the 10th National Committee of CPPCC, said the biggest difficulty for the private sector is capital expansion.

It was reported that some 20,000 billion yuan of non-governmental capital is lying idle, failing to find its way into investment areas.

Most financial complaints, Wang said, can be relieved through the establishment of effective risk evaluation and credit recording systems.

In addition, Li Yining suggested encouraging the development of small private banks that will cover areas beyond the means of State-owned commercial banks and accelerate the construction of a capital market, including the growth board market for some small and middle-sized private enterprises.

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