China is committed to leveling the playing field between private entrepreneurs and their competitors in the state-run sector, two leading Chinese economic officials said today in another sign that the Chinese Communist Party is trying to remake itself into the party of business.
The officials also said China had begun an experiment to let farmers amass larger parcels of land in another controversial pro-business reform destined to bring back memories of landlords and landless sharecroppers before China's revolution in 1949.
They added that private businesses would be granted equal access to bank credit and could even be allowed to issue bonds to raise capital. Areas closed to private businesses in the past, they pledged, would be opened to private capital soon.
In another move that will further shrink the state-owned sector, foreign businesses have been granted approval to buy pieces of the state-owned companies listed on China's two stock exchanges, the officials said. About 65 percent of the shares in those firms are not traded. Foreign firms will now have the right to buy the un-traded portions of those state-owned firms, the pair said.
The officials, Zeng Peiyan, the head of the State Development Planning Commission, and Li Rongrong, chief of the State Economic and Trade Commission, announced the measures at a news conference during the 16th National Congress of the Chinese Communist Party. The congress, generally held every five years, is Chinese communism's most solemn rite, during which party bosses are appointed to lead the country.
The officials gave the distinct impression that the highest levels of China's government are preparing for the day when the economy will be dominated by private firms. Indeed, one of the main themes of the congress has been the announcement that the party will now welcome entrepreneurs into its ranks. Private firms currently account for about one-third of China's gross domestic product.
Zeng said the country's economy would grow by 8 percent this year, up from 7.3 percent last year, and the gross domestic product would hit $1.2 trillion. Total trade this year should reach $600 billion, while foreign investment in China surpasses $50 billion, he said.
Private firms now play an increasingly important role in keeping the Communist Party in power. The private sector is employing more people, and hiring them at a faster rate, than any other sector in the Chinese economy. Without such employment opportunities, Chinese officials acknowledge, the party's hold on power would be tenuous.
Zeng said the party was under "comparatively major pressure" when it came to employment. In the past few years, he said, lumbering state-owned enterprises have laid off 24 million to 25 million workers. And each year 10 million more people enter the workforce.
Private firms have complained that their access to bank loans is restricted because many banks have no credit mechanism or are controlled by local governments that favor state-owned firms. Li said such "policy" lending will stop.
"The playing field will be leveled," Zeng said.
Li said the party supported the growth of private business. In 1989, he said, China had 90,000 private firms. Today it has more than 2 million.
Private firms are banned from doing business in a variety of areas, but both Li and Zeng said those barriers would soon fall. Already, Zeng said, in eastern China, private road repair companies, banks and trash collection firms, all of which in theory must be owned by the state, operate openly.