ISLAMABAD: China’s top economic planner on Tuesday announced a raft of detailed measures to facilitate the country’s development of the private sector, including those relating to tax reductions and supporting the platform economy.
The National Development and Reform Commission (NDRC) stressed the need to tackle problems private enterprises are facing and at the same time boost their confidence.
These detailed measures came after the Communist Party of China Central Committee and the State Council last month released general guidelines, promising to improve the business environment, enhance policy support, and strengthen the legal guarantee for its development.
Wang Shancheng, an NDRC official, told a press conference on Tuesday in Beijing that the central government has appointed the relevant ministries to take on the responsibility to supervise and implement each measure.
Meanwhile, private firms will be encouraged to participate in major national projects that are profitable and mature, issue real estate investment trust (REIT) products for infrastructure projects, and lead technological programs in key areas such as industrial software, cloud computing and artificial intelligence.
China’s authorities will continue to publish investment cases that are “green-lighted” as a reference for companies, in a bid to promote the sound development of the platform economy.
Companies will enjoy an easier process of tax reduction in research and development spending, shorter time in export rebates, and strengthened inclusive financial support.
In terms of legal guarantees, regulations and official documents violating the principle of equality for enterprises of various types of ownership will be abolished to protect the development of the private economy.
The government will improve its services to help private businesses solve difficulties, cut red tape in administrative approval, clear arrears owed to small and medium-sized enterprises, and actively engage with entrepreneurs during the policymaking process.
Sweeping measures
The 28 measures were released in a notice issued Tuesday by eight ministerial agencies, including the National Development and Reform Commission (NDRC), the nation’s top economic planning agency, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Science and Technology and the People’s Bank of China (PBC), the central bank. The measures cover five areas: fair market access, stronger financial and land support, greater legal protection, better government services, and better business environment.
“The measures are very comprehensive, covering areas such as market access, incentive mechanism as well as encouragement for the private sector to participate in major projects in key areas,” Cao Heping, an economist at Pecking University, told the Global Times on Tuesday, noting that the measures are very detailed in its content, which allows local governments to better implement them and let all specific private companies to “feel the advantages brought by these policies.”
The ministries said a list of major national projects that are profitable and mature, in which private firms are encouraged to participate, will be formed. Also, the issuance of Real Estate Investment Trust products (REITs) for infrastructure projects will be increased, and qualified private firms will be encouraged to issue REITs, so as to boost private investment. A reserved quota of 40 percent for private firms in government procurement will be extended to the end of 2023.
Private firms will also be encouraged to participate in major science and technological projects and lead missions to tackle core sci-tech areas such as industrial software, cloud computing and artificial intelligence. The measures also include continuation of “green light” investment cases for the platform economy, a process through which authorities grant approval of certain investment deals of private internet platforms.
These measures are very significant, as they cover “areas where the private sector is very active and relatively competitive,” Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Tuesday, noting that measures in other areas such as legal protection and financial support are conducive to boosting the confidence of private entrepreneurs and investors, and promoting the overall recovery of the economy and employment.
In terms of financial support, the ministries said on Tuesday that they will offer private businesses easier process of tax reduction in research and development spending, shorter time in export rebates, and strengthened inclusive financial support. Also, more private firms will be qualified to issue bonds.
They also vowed strengthened legal protection for private firms, including greater efforts to pay up debts owed to private firms and the abolishment of regulations and official documents violating the principle of equality for enterprises of various types of ownership. The ministries also called for adjustments to land supply to meet private firms’ demand for land use.
Improved expectation
“I am very pleased to see this measure [about helping private firms’ land use] … This will address the biggest challenge our company is facing,” Xu Lingji, who owns an electric instrument set company in Hangzhou, East China’s Zhejiang Province, told the Global Times on Tuesday, noting that the measures are “very encouraging,” but he looks forward to more detailed implementation measures from local governments.
“The 28 measures are very swift and targeted,” Tian Yun, a Beijing-based economist, told the Global Times on Tuesday, noting that the measures included those aimed at tackling the thorniest challenges faced by private firms amid downward economic pressure, including delayed payments and declining orders. But Tian also noted that the thorough and efficient implementation of the measures by relevant departments and localities are crucial to ensure that the measures will help boost the private economy and stabilize overall economic operations.
“But in any case, this is a catalyst and a shot in the arm, which should offer some guarantee for the recovery of the private economy in the second half of the year,” Tian said.
The 28 measures are part of China’s increasing efforts to boost the ongoing economic recovery in the second half of 2023, amid internal and external downward pressure. Chinese officials and analysts have repeatedly said boosting consumption and the private sector is crucial in tackling downward pressure and ensuring a steady recovery.
