China will not ‘discriminate’ between state and private companies, vows Premier Li Keqiang
- Premier ends National People’s Congress by promising to introduce measures to alleviate burdens felt by the private sector
- Entrepreneurs often feel treated differently to state-owned enterprises despite the private sector contributing 60 per cent of China’s gross domestic product
China will not “discriminate” between state owned and private companies, with Premier Li Keqiang vowing to roll out a series of measures to alleviate some of the burdens felt by the private sector including lowering the cost of financing.
“We will ensure all companies benefit from our administrative streamlining measures. There should be no discrimination,” Li said at the conclusion of the National People’s Congress (NPC) in Beijing on Friday.
“Through years of efforts, we have cut the time required for getting a business licence from the previous 22 days to 8.5 days, this year our goal is to cut it to five days, and in some places with better conditions, we may cut it to three days.”
Companies, though, have complained that even after obtaining their business licence, they still required additional certificates.
“That is, their companies can be up not actually running. This year, we plan to ensure that all companies can start operation right after they get the business licence,” added Li.
China’s private business owners have been worried since online commentators and academics boldly claimed last year that the private sector had “basically fulfilled its task of assisting the state-owned economy in achieving its rapid development”.
Huang Jianping, an NPC delegate and president of Dongguan-based tile company Wonderful Group, said that local government officials were reluctant to deal with entrepreneurs because of Beijing’s anti-corruption campaign, which had resulted in a lot of bureaucracy and inefficiency.
In October, President Xi Jinping convened an unprecedented symposium to hear the views of dozens of representatives from the private sector, which contributes 60 per cent of China’s gross domestic product, aimed at boosting confidence with China’s economy witnessing its slowest growth since 1990.
Huang added that the local government became more efficient after Xi’s symposium.
Zhai Meiqing, president of the Guangzhou-based Heung Kong Group and a member of Chinese People's Political Consultative Conference, said that private firms require substantial legal protection of their assets in addition to being treated the same as state-owned enterprises (SEOs).
“The assets of SOEs belong to the state, so how will local governments treat private firms equally? We look forward to real legal protection of private property from infringement,” she said.
Chinese private property may not receive equal protection in the same way as public property, or even state property, as the constitution offers more weight to the protection of public property.
Article 12 states that “socialist public property” is “sacred” and “inviolable”, while Article 13 states that “the legitimate private property of citizens shall not be infringed”, crucially omitting the word “sacred.”
The assets of SOEs belong to the state, so how will local governments treat private firms equally? We look forward to real legal protection of private property from infringement.
In addition, Article 13 also clarifies that “the state may levy or expropriate the private property of citizens in accordance with the law” for “public interest”.
Premier Li acknowledged that the government had reduced the deposit reserve ratio for banks four times last year and twice already this year to “promote the flow of these funds to the private economy and small and micro businesses.”
“We will take multiple measures to reduce the financing cost of small and micro enterprises by one more percentage point from last year,” Li said.
“I can say that we cut the tax, streamline administration, and enforce fair supervision to cope with the downward pressure on the economy and stimulate the vitality of the market. The purpose is to make the Chinese economy stable.”
