The central government, faced with slowing growth of private investments, will inspect a nationwide implementation of policies that encourage private capital to enter new fields in hopes of boosting China's economic vitality and international competiveness.
An executive meeting of the State Council presided over by Premier Li Keqiang on Wednesday made the decision in addition to looking over the integration of internet and the manufacturing sector, the housing rental market, and general aviation projects.
Private investments play a crucial role in boosting economic growth and restructuring as well as creating more jobs, said a statement of the meeting. However, the statement also said the growth rate of private investments slowed down recently and the government should take sturdy measures to further relax market access and create fair competition to ensure a steady growth of private capital.
Private investments accounted for about 65 percent of the country's fixed asset investments last year, from that 30.6 percent in 2004, according to a report by the research institute of China Minsheng Bank in January. The growth rates of private investments had declined nationwide, especially in western China.
Zhao Nong, a researcher at the Institute of Economics at the Chinese Academy of Social Sciences, applauded to the policy which he thinks will break up monopolies in some industries and increase vitality of domestic economy.
"Private capital can meet the demand in some areas where government-pooled investments cannot reach. Governmental revenues are no longer increased as much as it used to be over the past two years," said Zhao.
"China's manufacturing sector is facing double challenges from high-end manufacturers in countries such as Germany and also low-cost competitors from India and Southeast Asia.".
"When monopoly is broken in some industries such as telecommunications and energy sector, private investors will be willing to promote technological upgrading and pursue higher profits."
"By doing this, costs can be reduced to ease the burden for downstream companies and enhance the competitiveness for Chinese manufacturers in the global market."
"Meanwhile, the move is also expected to create more job opportunities since private companies have provided a great number of jobs created for urban residents and migrant workers," he said.
In 2014, the State Council announced 39 new regulations to encourage private capital into fields such as transportation, energy, and environmental protection. Wednesday's move was a follow-up on Premier Li's announcement in March, 2015, that promised to remove barriers of market access for private capital.
