Opening up in industries as platform for investment: experts
The implementation of the 165 major projects listed in the nation's 13th Five-Year Plan (2016-20) will provide a broad platform for private capital, a senior official from the National Development and Reform Commission (NDRC), the country's top economic planning agency, said Tuesday.
In March, China approved an outline of its 13th Five-Year Plan which proposed a total of 165 projects in fields ranging from urbanization to infrastructure to ecological development.
Some of the programs are government-led, while others require the participation of both the government and private capital, Hu Zucai, vice chairman of the NDRC, stated at a press briefing on Tuesday.
The implementation of the projects will drive the development of whole industrial chains of related sectors and set positive signs for private investment, Hu said.
The major plans in environmental protection, for example, which include integrated utilization of resources, recycling, pollution control and air, water and soil remediation, will bring a number of opportunities to the industry, according to Hu.
Those companies that provide equipment, technologies and services will find good opportunities in these programs. This will also address the concern of some entrepreneurs who feel baffled with identifying chances for investment.
Currently, investment in the private sector is at a record low.
In the first seven months of the year, China's fixed-asset investment increased by 8.1 percent year-on-year, the National Bureau of Statistics said on August 12. However, fixed-asset investment in the private sector only expanded by 2.1 percent during the same period. The rate was around 10 percent in 2015.
Vast opportunities
Tian Yun, chief editor of the China Macroeconomic Information Network, said attracting private investment is difficult but in some sectors the opportunities are huge.
"As infrastructure projects demand hefty investment, generate low returns, and require a long pay-off time, private investors' willingness to participate is restrained, given the general trend of private investment as a pursuit of quick money," Tian told the Global Times on Tuesday.
"Further, the opening-up of new industries involves reforming a wide range of sectors and dealing with entrenched interests. This approach can be time-consuming and hinders a timely boost in private investment, but the task of raising private investment is urgent," Tian said.
"Private capital does not have to master technologies, it can work together with the government by providing funds to ensure the success of the project, and then seek an exit with a reward," Liu Dongliang, an analyst at China Merchants Bank, told the Global Times on Tuesday, noting that public-private partnership (PPP) is a good example.
Tian believes that the high-tech sector is one area which has a lot of potential in attracting private investment for projects.
"Troves of technologies are in the hands of State-owned enterprises (SOEs) but they lack the expertise to commercialize their application. For instance, a government unit in the national defense sector has more than 1,000 military-grade proven technologies and they want to commercialize these technologies with the help, expertise and money from private companies," Tian said.
"Both supply and demand are ready in this regard. The only thing the government needs to do is to devise a system or platform to allow these SOE technologies to go into the market with the participation of private firms," Tian stated, noting that military-grade technology of course will need to be converted into civilian-grade technology first.
Necessary reforms
However, Liu said the country still needs to perfect laws and regulations that will ensure the interests of private capital are protected and to further trust between the government and companies.
To build up a fair environment, providing a leveled playing field for private capital, Hu said more work will be done to give more market access to private capital in certain areas.
The State Council has indicated a speeding-up of government work in devising a negative list approach to manage investment, and stressed the further opening up of fields including aeronautics, basic telecom communication and oil and gas exploration, Hu said.
On the same day, the NDRC said contracts have been inked on 619 projects in its PPP project base. These projects are worth more than 1 trillion yuan ($150.8 billion).
