China steps up efforts to boost private economy

China has taken a bunch of measures to support the development of the private economy, which is a sector of great concern to the society, a spokesperson with the annual session of the country’s top political advisory body said on March 2. As an important part of the socialist market economy, the private economy plays an irreplaceable role in stabilizing growth, promoting innovation, increasing employment, and improving people’s livelihood, Guo Weimin, spokesperson for the second session of the 13^th Chinese People’s Political Consultative Conference (CPPCC) National Committee, told a press conference. Boosting the private sector was a priority issue of the CPPCC National Committee last year, Guo said, disclosing that China’s private investment has accounted for more than 60 percent of the country’s fixed asset investment for five consecutive years since 2012. Private enterprises contributed to more than half of China’s taxation with nearly 40 percent of resources, 60 percent of GDP, 70 percent of technological innovation and new products, 80 percent of urban employment and 90 percent of new jobs, the spokesperson said.

Over the past years, the country It has rolled out incentives for companies willing to put more emphasis on financing made good use of government-led funds and established the mechanism to provide short-term funds for companies unable to pay for loans on time. It has improved the risk compensation mechanism for lending to private businesses in a bid to encourage banks and financial institutions to further reduce fees for and give more benefits to small- and micro-sized enterprises (SMEs), and regulated fees charged by intermediaries for financing services. The country has also promoted the establishment of a financing guarantee system and deepened the cooperation between banks and financial institutions, enterprises and tax authorities to address the difficulty of financing for law-abiding firms.

The country has also improved business registration facilitation. It launched a series of reforms, including the reform of the registered capital system, the reform to achieve “issuing a license before an operating permit”, the reform of the registration system by merging different forms of certification required of businesses into one certificate, and the reform of simplifying enterprise deregistration. These measures have stimulated market vitality and consolidated the foundation for the development of private enterprises, providing new drivers for economic transformation and upgrading. China has set up efforts to help clear arrears to SMEs.Since November 2018, all regions, relevant departments, and large state-owned enterprises have acted to pay off the overdue debt to SMEs and private companies as required. So far, a total of 160 billion yuan (about $23.8 billion) has been paid, which has been used preferentially to settle the wages owed to migrant workers and projects related to people’s livelihood.

China has continuously relaxed market access, expanded space for private investment, and made investment and trade more convenient. The country has further opened key areas such as civil aviation and railways, attracted private investment to actively participate in the construction of civil airports and high-speed railway projects, and guided monopoly industries to introduce private investment through mixed-ownership reform. By deepening the Internet Plus government services model, the government has made it easier and more efficient for private enterprises to start and operate businesses. China has lowered the burden of taxes and fees on private enterprises. Since the reform of the replacement of business tax with value-added tax (VAT), the government has actively lowered the income tax burden of private enterprises, reduced and exempted some government funds, and cut fees and charges levied on businesses. In the future, substantial tax and fee cuts including the reduction of VAT will be advanced, while tax exemptions will be provided for SMEs as well as technology startups. The nominal rates for social security contributions will also be lowered.

By Li Xinyi

(People’s Daily)