Access to State-dominated sectors to be eased
China is beefing up measures to halt the slowdown in private investment, and analysts said Thursday that market access thresholds for private companies could be eased to break monopolies in some sectors.
One of the latest measures taken by the central government was announced by Premier Li Keqiang during a regular meeting of the State Council on Wednesday, with special inspection groups to be sent to review the implementation of recent related incentives in some regions.
According to a post on the central government's website on Wednesday, the incentives were issued by China's cabinet in 2014 to encourage private companies to enter key innovative sectors and bring vitality to the economy.
The State Council also decided during Wednesday's meeting to ease market access and create a more equal business environment to support private capital.
Following this, the State Council on Thursday issued a package of measures to further open up the country's salt industry.
Private capital will be encouraged to enter the salt production business via cooperation with authorized production companies in China, and salt wholesalers will be allowed to attract private investment, but must still remain State-owned.
Analysts applauded the new policies, saying they would send a positive signal that the central government is determined to boost the role of private companies in the country's economic development.
"Private investment is a crucial driving force for China's private sector, which provides over 80 percent of the country's total employment opportunities," Premier Li said at the meeting on Wednesday.
Investors still wary
However, there appear to be concerns among private investors, because the growth rate of their investment has been declining over the past year.
In the first quarter of 2016, private investment rose by only 5.7 percent, down 7.9 percentage points from the same period of 2015, according to data from the National Bureau of Statistics.
"Private investors have tended to be cautious about projects involving national resources since 2009, when large-scale enterprises - mainly State-owned ones - were encouraged to take a more prominent role in sectors such as energy, construction and education," Zhou Dewen, president of the Wenzhou Council for the Promotion of Small and Medium-sized Enterprises, told the Global Times on Thursday.
Local governments generally gave priority to the interests of State-backed companies and private capital had no chance to invest in promising projects, said Zhou. "Things have changed thanks to lots of measures taken by the central government."
In May 2015, the National Development and Reform Commission unveiled new laws enabling private investors to get involved in projects in the energy, transportation, water and environmental protection sectors.
A report issued by China Minsheng Bank in January showed that private investment accounted for about 65 percent of China's fixed-assets investments in 2015, in comparison with the figure of 30.6 percent in 2004.
The review by the inspection groups, which will be carried out during May in 18 provinces and autonomous regions across China, will help to restore private companies' faith in government-backed projects, said Zhou.
The State Council said that a third-party evaluation of the implementation of the incentives will also take place at the same time.
Wang Danqing, a partner at Beijing-based ACME consultancy, said the government could launch more stimulus measures to counter the slowing growth in private investment.
The slowdown is also a result of a lack of suitable projects for private capital, Wang told the Global Times Thursday.
"In order to boost private investment, it is important to take measures to further open the economy to private capital and break monopolies in industries such as energy, finance and banking," Wang said, noting that a project led by private capital would be more efficient than one controlled by the government.
Both Wang and Zhou noted that at the moment, government incentives are mainly in favor of investment in infrastructure construction, areas that most private investors are wary about because of the high costs involved and the length of time before they generate returns.
