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New guideline to tackle key challenges of China's private firms

Updated: Dec 25,2019 09:48 AM    Xinhua

BEIJING — China's private companies are expected to receive a boost as a new guideline addresses key obstacles they are facing.

The guideline, jointly released by the Central Committee of the Communist Party of China and the State Council over the weekend, detailed measures that will create a better business environment for the private sector to unleash its vitality and boost fair competition.

China's private sector is playing an increasingly important role in the economy, contributing more than 50 percent of tax revenue, 60 percent of GDP, 70 percent of technological innovation, 80 percent of urban employment and 90 percent of total firms.

However, many private firms still suffer from challenges such as high entry barriers and financing difficulties, pushing policymakers to roll out new support measures, said the National Development and Reform Commission.

"The guideline came at a time when the private economy is faced with key bottlenecks in the context of profound changes both at home and abroad," said Chi Fulin, head of the Hainan-based China Institute for Reform and Development.

Under the guideline, private companies will enjoy broader market access in sectors including basic telecommunication, oil and gas, infrastructures, social undertakings and financial services.

"The guideline targets specific sectors and is very doable, blazing a trail for creating a competitive market system in various sectors," said Wang Shuguang, a professor with the School of Economics of Peking University.

In addition to wider market access, the guideline also aims to cut the tax burden on many private companies while supporting their financing needs, another key issue that bothers firms when they make reinvestment plans.

The private economy has already basked in the benefit of tax and fee reduction policy. Newly-introduced tax reduction measures saved the private sector 964.4 billion yuan (about $137.5 billion) in the first three quarters.

Ye Qing, vice-president of All-China Federation of Industry and Commerce, said that the measures are very targeted and easy to implement.

"Through the detailed policy measures, macro-policies can be put into practice at the enterprise-level," Ye said.

The guideline also encouraged private firms to improve corporate governance, enhance technical innovation and industrial upgrading to boost their long-term competitiveness.

By providing concrete guides to reform and innovation, the guideline bolsters the confidence of private enterprises, and motivates them to accelerate high-quality development, said Zhang Xin, chairman of energy equipment supplier Tebian Electric Apparatus Stock Co Ltd.