China to open more private capital investment Channels

In a bid to stimulate tepid economic growth, China is making all-out efforts to encourage private investment. According to the country's top think tank, China's private capital will play a major role in the country's fixed-asset investment over the next eight years, reaching 80 percent of the total figure. Something pretty, something gold.

The drop in price in the traditional safe-haven commodity, gold, triggered quite a frenzy during China's annual May Day holiday this year. Some argue that this phenomenon reflects China's lack of private capital investment channel.

But, an independent director of the China A share fund -James Sha, thinks differently.

"I think there are quite a few China's private investment channels, number one is the China's stock market - which is predominately traded by individual investors. Gold rush doesn't mean lack of sufficient private capital investment channels, it shows people are consuming more of luxury goods. And I think there are sufficient private capital investment channels in China. It's just the investor sentiment is not high." James Sha, Indept. Director of China A Share Fund said.

This year's government work report proposed to "improve and implement policies and measures for developing the non-public sector; break up monopolies and relax restrictions on market access; encourage non-governmental investment in public utilities; and create a fair environment". This indicates civil capital will have more investment avenues.

"The CSRC (China Securities Regulatory Commission) has been doing a lot to try to create institutional investor base to make their investment decision to help them to invest. And the CSRC is relaxing regulations on rules to make the asset management company etc to create competitive and transparent investment strategy that available for individuals." James Sha said.

It is in the nature of capital to go after profit. When it runs into all sorts of industrial policy barriers and is not properly guided, it tends to barge about and heads for where the profit is. Experts say the healthy development of civil investment requires government guidance, policy support, and help from financial institutions, but also favourable social investment environment and a market economy.