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China has further expanded on responsibilities for government departments and local authorities to implement its new policy on private investment. The State Council, China's Cabinet, made the statement on Monday. This is a step towards final implementation of the policy.
The State Council has allocated 40 responsibilities regarding the promotion of private investment, to more than 20 government departments and local governments. This follows the nation's first document in mid-May encouraging private investment in a new range of sectors. Sectors include transport, telecom, as well as oil and natural gas.
Han Zhifeng, from the National Development and Reform Commission, China's top economic planning body, says the next step is to work out implementation measures as soon as possible.
Han Zhifeng, Director of Department of Fixed Asset Investment, NDRC said "Authorities who have been assigned tasks should work on detailed implementation measures. These measures should be as elaborate as possible and be real operational guidelines. During the process, they should stick to principles of reform and opening-up and try to provide a fair investment environment and criteria."
Experts are suggesting detailed measures should emphasize capability improvement of private enterprises.
Liu Shangxi, Deputy Director of Research Institute for Fiscal Science, MOF said "These measures shouldn't be targeted at simply helping private companies resolve difficulties. Instead, they should focus on strengthening their capabilities, including scientific research, management standards, and labor force skills."
China's private investment accounts for more than half of the nation's fixed assets. But of the 80 industrial sectors, private capital can only be found in 41, far less than their foreign rivals.
The government has unveiled a number of policies over the past years, to help develop the private sector. But the guidelines lacked detail and the efforts were unsuccessful. The sector is now pinning hopes on the new policy to turn the scale.
A wider playing field, and fairer competition. The new policy promises bright prospects for private companies. But the absence of detailed implementation measures so far is putting the new move in danger of sharing the same fate as its predecessor. Will China achieve its reform ambition of unshackling its private sector growth engine? The policy is just a litmus test.
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