Top economic planner emphasizes importance of private capital
The National Development and Reform Commission (NDRC), China's top economic planner, reemphasized the role of reform in stabilizing economic growth at a work conference held on Friday and Saturday in Beijing.
The country is now facing difficulties and challenges worse than last year due to continued downward pressure, according to a post on the NDRC's website over the weekend.
The NDRC said that the downturn pressure has been intensified by ongoing problems in the world economy. Also, the country is facing challenges amid its economic restructuring, such as the lingering effects of previous stimulus policies, so reform measures are needed to counter these problems.
"The NDRC hopes to combat the negative impact from external problems on China's economy by adopting internal reforms. It could help to build confidence in the economy," said Ding Jianping, director of the Research Center for Modern Finance at the Shanghai University of Finance and Economics.
The NDRC said at the meeting that reforms in six areas need to be promoted this year.
For instance, the government needs to ensure that the market plays a major role in the economy, and further streamlining administrative powers and delegating them to local governments could help in this regard, the NDRC said.
The NDRC also noted that reforms of State-owned enterprises (SOEs) should allow for greater participation by private capital, which should also be given access to major sectors like electricity and energy.
The government needs to improve legislation in investment fields so as to allow private capital to participate more in infrastructure construction, the NDRC noted.
"SOE reforms should be concentrated on improving efficiency by implementing an effective incentive mechanism," Ding said. "It is not a matter of size or monopoly, but efficiency."
Luo Yuding, acting dean at the School of Business at Shanghai University of Finance and Economics, forecast that as reforms are deepened, SOEs will gradually move out of competitive sectors such as telecommunications.
An announcement released after a meeting of the State Council on Wednesday said that the country's major telecommunications carriers should come up with plans to reduce fees and improve the speed of telecom networks.
The country's three State-owned carriers - China Mobile, China Unicom and China Telecom - all announced plans to reduce fees later last week.
But experts noted that allowing more players into the sector and encouraging competition would be the best way to reduce fees and improve services in the sector.
To better support the economy, the NDRC also said that tax and financial reforms should be promoted. It said that the country will further open up the financial sector and encourage the development of small financial institutions, which could be an important source of funding for small firms.
The NDRC also emphasized the importance of opening-up at the meeting. The country's "One Belt, One Road" initiative and the development of free trade zones (FTZ) should be facilitated, it said.
Ding noted that successful experiences in the Shanghai FTZ could be introduced nationwide, which would bring greater vitality to the economy.
Also, the "One Belt, One Road" initiative has provided a new set of opportunities for Chinese firms to go abroad, which could boost economic cooperation along the route and become a new driving force for the economy, Ding said.
China's economic growth slowed to 7 percent in the first quarter, and is still facing considerable headwinds.
"These reform measures can effectively aid China's economy if they are well implemented," Luo said.
