China's Private Sector Seeks Constitutional Recognition

Strategic Insights -

Beijing-based private business owners and officials are voicing strong support for a proposed constitutional amendment that would formally recognize the private economic sector as a vital component of China's socialist market economy. The move is seen as a crucial step towards promoting economic diversification and growth, particularly for small and medium-sized enterprises. Deputies at the ongoing Second Session of the Ninth National People's Congress (NPC) have expressed optimism that the amendment will help level the playing field for private businesses, providing them with the much-needed legitimacy and support to expand their operations.

Key Takeaways:

  • The proposed constitutional amendment aims to formally recognize the private economic sector as an essential component of China's socialist market economy.
  • The number of private firms in China has grown from 90,000 a decade ago to over one million today, with more than 32 million workers employed in the sector.
  • The annual added value of non-public industrial enterprises accounts for 50 percent of the country's total annual industrial added value.
  • Private businesses have been encouraged to participate in the restructuring of public sector enterprises through share-holding, purchase, merger, and leasing.
  • The government has granted 61 private companies permission to export or import goods, a privilege previously reserved for state-owned factories.
  • Local banks will no longer issue loans based on company ownership type, but rather on their performance, in a bid to promote fair competition.
  • The non-public sector is expected to significantly increase its competitiveness and expand its business scope with the support of state policies and credits.
  • Large private enterprise groups are anticipated to emerge and play a crucial role in China's economic development.

Statistics:

  • The number of private firms in China has grown from 90,000 a decade ago to over one million today.
  • More than 32 million workers are employed in the private sector.
  • The annual added value of non-public industrial enterprises accounts for 50 percent of the country's total annual industrial added value.
  • 61 private companies have been granted permission to export or import goods.
  • The number of workers employed in the private sector is expected to increase significantly with the support of state policies and credits.

Sources:

  • XINHUA
  • Chinese Academy of Social Sciences
  • COMTEX (http://www.comtexnews.com)
  • Fifteenth National Congress of the Communist Party of China (CPC)
  • People's Bank of China