The Chinese government will take a series of measures to encourage private investment in the country, further unleashing business potential in the private sector.
Chinese Premier Li Keqiang called Wednesday on central and local government departments to take concrete steps to boost private investment, after hearing reports from a related inquiry at a State Council executive meeting he chaired.
During the meeting, Li urged the government at all levels to pay attention to problems revealed in the inquiry, especially difficulties privately-run companies meet in financing as well as excessive administrative charges.
He stressed that private investment is of critical importance for China to maintain stable economic growth, secure employment and reform its economic structure.
The nationwide fact-finding mission on a slowdown in private investment was initiated by the State Council a month ago, covering 30 provinces and regions.
A third-party evaluation was carried out by the All-China Federation of Industry and Commerce as well as related research institutes. More than 500 enterprises were involved and over 10,000 questionnaires on the implementation of private investment policies were handed out in the survey.
Major factors leading to a decline in private investment are found to include pressure of an economic downturn, reduction of excessive capacity, insufficient policy implementation, as well as financing difficulties facing local smaller, privately-run companies.
Li said accomplishing goals in nurturing new economic driving forces, developing a new economy and carrying out a supply-side reform among other structural ones require the development of privately-run small- and medium-sized enterprises (SMEs) in China.
"Otherwise, we will not achieve the goal we set," he said.
The survey revealed that many state-level policies to boost private investment were not fully realized. For instance, the implementation of those unveiled by the State Council in November 2014 met setbacks at local levels or didn't mesh well with established practices.
Some surveyed private enterprises complained that though the central government has done a lot over the years to reduce institutional barriers in doing business and stimulating their growth, they were denied equal treatment with local state-owned enterprises (SOEs), being sometimes blocked by the threshold the local government set for access to certain projects.
Li pointed out during the meeting that properly handling the relations between the government and the market in addition to deepening reforms are vital to boost private investment.
"The government should fulfil its duties, but must not abuse its power," he said.
More measures are expected to be unveiled by the State Council to resolve the abovementioned problems of privately-run companies, such as in improving access to credit, increasing institutional support for local public-private partnership (PPP) programs, reducing administrative costs and further widening market access.
"Building up strong confidence in private investment is important to China's economic growth when it is slowing down," Li said.
During a visit on Monday to China's central bank, People's Bank of China (PBOC), the premier also noted that the financial sector should support the real economy and develop financial products encouraging startups and innovations by ordinary Chinese.
Private investment has been playing a vital role in China's economic development in recent years. It now accounts for 60 percent of China's gross domestic product (GDP), 80 percent of jobs, more than half of the tax revenue as well as 67 percent of China's direct outbound investment.