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China's domestic private capital drives economy
2003-06-13
Xinhua
A huge construction project on China's Hangzhou Bay bridge in east China has utilized domestic private capital for the first time, accounting for over half of its total investment.
The country's first sea traversing bridge, also said to be the longest in the world, will cost about 11.8 billion yuan (1.42 billion US dollars), of which private capital pays for 50.26 percent.
Setting up automobile firms, merging real estate companies and buying airports, a series of "breakthroughs" have been made by private capital in various areas of China that used to be strictly off-limits.
The share of private capital investment among total social investment has increased greatly over the past 20 years, up to 40 percent, said the latest figures from the National Bureau of Statistics (NBS), indicating seven new sectors to attract more domestic private capital in the future.
According to the investigation, the seven sectors included the traditional industries like automobile and real estate, high-tech industries like computer and Internet, infrastructure construction like traffic, communications, energy and electric power, county or city-level economic development, development of the country's West, urbanization construction, and state-owned enterprises reform.
With stable profit returns, infrastructure construction in China, including traffic, communication, energy and electric power, will offer a new stage for domestic private capital.
In Shanghai, when the city first launched a private investment plan for the city's maglev transportation system, thousands of people snapped up investment of 200 million yuan (about 24.2 million US dollars) within an hour.
Domestic private capital investment now accounts for half of Shanghai's total infrastructure construction, while 70 percent of the city's highway investment also came from the private sector.
Private investment in the housing and automobile industries in China is expected to play a leading role to boost the national economy. Upon the withdraw of state-owned capital from these traditional industries, private capital will play a key role in boosting growth.
In Beijing, private capital has accounted for 61.3 percent of the city's total housing investment.
High-tech industries contribute more to the national economy, and private enterprises are turning to this new sector. Almost all Chinese enterprises involved in computer production and the Internet are privately owned, some of which have become world famous.
As a new choice for domestic private capital, the combination of private capital and high-tech industry has been adopted by some local cities as their main development strategies.
Qiu Xiaohua, deputy director of NBS, said Chinese privately- owned financial assets exceeded 12 trillion yuan (1.45 trillion US dollars) by the end of 2001, and in the same period, state-owned assets totaled only 11 trillion yuan.
Along with the development of China's western areas and the adoption of a positive fiscal policy, the Chinese government has acted positively to speed up the reform process and accelerate private capital investment, and encourage flexible participation of private capital.
At the same time, some experts say the Chinese government should further expand financial channels and improve the investment environment for domestic private capital.
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