Sun Xuegong Rongchen
Key takeaways:
Focusing on demolishing the "fence", removing the "heart knot", and thickening the "soil", so that private enterprises can "invest with peace of mind", "some investment" and "good investment", which has important practical value and far-reaching significance for expanding domestic demand and promoting the sustained, stable and healthy development of the economy.
We will further advance the reform of the administrative examination and approval system and the reform of the commercial system, speed up the handling of formalities for the preliminary work of investment projects, establish a regular communication mechanism with key private investment projects, and improve the mechanism for the government to keep its promises and fulfill its promises.
Private investment is an important force in promoting economic development, stabilizing overall investment, and expanding social employment. General Secretary Xi Jinping stressed that it is necessary to stimulate the vitality of private capital investment, encourage and attract more private capital to participate in the construction of major national projects and key industrial and supply chain projects. At present, efforts should be made to stabilize and expand private investment, focusing on tearing down "fences", removing "heart knots", and thickening "soil", so that private enterprises can "invest with peace of mind", "some investment" and "invest well", which has important practical value and far-reaching significance for expanding domestic demand and promoting sustained, stable and healthy economic development.
We fully understand the great significance of stabilizing and expanding nongovernmental investment in expanding domestic demand
First, private investment is a new force for investment in the whole society and the real economy, affecting the overall investment situation. Since 2012, when there were statistics on private investment, the proportion of private investment in fixed assets in the whole society has always remained above 50%, 80% of industrial investment, and 85% of manufacturing investment. Due to the impact of local debts and the "de-risking" of some Western countries, some local government investment and foreign direct investment growth are facing many difficulties and challenges this year, and it is all the more necessary for private investment to take the lead in stabilizing the overall investment situation.
Second, private investment is the main force of investment in new productive forces, which has effectively boosted the quality of investment. Since 2012, the average annual growth rate of R&D expenditure of private enterprises has reached about 20%, accounting for 78% of the social R&D investment in the mainland, contributing more than 70% of technological innovation achievements, and concentrating 80% of the specialized, special and new "little giant" enterprises and 90% of high-tech enterprises, which is an important foundation for the development of new quality productivity in the mainland. Promoting private investment will effectively improve the quality and efficiency of investment.
Third, private investment is a major creator of jobs and plays an important role in expanding consumption. From the perspective of job creation, the private investment mechanism is flexible and close to the market, and the employment absorption capacity is strong. According to the questionnaire survey conducted by the All-China Federation of Industry and Commerce for private enterprises, private enterprises provide more than 80 percent of urban jobs and absorb nearly half of the university graduates; and the data of the national survey of active market entities show that individual industrial and commercial households and enterprise households absorb 2.5 and 8.1 employed persons on average. Employment is the basis of income and consumption, and the creation of a large number of employment opportunities by private investment will promote the increase of residents' income, which in turn will drive the growth of consumption.
Fourth, private investment is a powerful tool for stabilizing foreign trade and is conducive to expanding foreign demand. At present, the global trade situation is complex and severe, and private enterprises have become the "stabilizers" of the mainland's foreign trade by virtue of their flexibility, sensitivity and innovation. In 2023, the number of foreign trade operators with import and export records in mainland China will exceed 600,000 for the first time, of which 556,000 will be private enterprises, accounting for 86.2%, a new high, and in terms of value, the total import and export of private enterprises will be 22.36 trillion yuan, an increase of 6.3%, accounting for 53.5% of the total import and export value, an increase of 3.1 percentage points. More importantly, private investment is good at seizing market opportunities and vigorously opening up new markets for foreign demand.
At present, private investment is facing the problems of "fence", "heart knot" and "soil".
From the perspective of industry access, the "glass door" and "spring door" of private capital participation in some fields have not yet been broken. According to relevant statistics, there are about 80 areas of state-owned economic investment on the mainland, about 60 fields in which foreign investment is allowed, and only more than 30 fields in which domestic private capital is allowed to invest. In practice, for some major projects with large investment and long cycles, some places implement a "clear, prohibited" bidding process, and obvious discriminatory words such as "in principle give priority to state-owned enterprises" appear in the bidding documents, or the approval and filing procedures are too complicated, so that private enterprises can only "retreat in the face of difficulties". Some private enterprises have reported that the tilt towards state-owned enterprises in the field of government procurement is becoming more and more obvious, and private enterprises not only have to pay high management fees, but also need to go through several outsourcing hands before they can get business. According to data from the National Development and Reform Commission in May 2023, since 2022, more than 50,000 related projects have been promoted in various places, and more than 9,000 private capital have participated, accounting for only 18%.
Judging from the Internet public opinion, some remarks that are not friendly to the private economy have affected the enthusiasm of private capital. In addition, some financial institutions are not willing to support the financing of private enterprises based on cost, risk and other considerations, and are "afraid of loans, reluctant to lend, and cautious to lend" for private investment, resulting in difficult and expensive loans becoming a "heart disease" that plagues private enterprises, limiting the ability of private capital to invest, and weakening the stamina of private investment.
From the perspective of the business environment, the fertile soil for the rule of law and internationalization of the high-quality development of the private economy needs to be further cultivated. The business environment is the soil for the survival and development of enterprises, and the quality of "soil quality" is directly related to market vitality and economic development momentum. In recent years, all localities and departments have taken the optimization of the business environment as a major project, established and improved the "one game of chess" promotion mechanism, the institutional transaction costs have continued to decline, and the market vitality and social creativity have been continuously stimulated. However, it should also be noted that in terms of the rule of law, the current promotion and protection of the business environment by some laws is not sufficient, the policy system of some specific industrial fields is still insufficient, the relevant supporting administrative law and normative system is still relatively scarce, and the sense of policy acquisition of private enterprises is poor, which makes the promotion and guarantee of the construction of the environment for the development of the private economy insufficient; compared with the international best practices, there is still a certain gap in the business environment of the mainland. The business environment in areas such as tax payment and cross-border trade still lags behind that of other advanced economies, and some laws and regulations are not yet effectively aligned with international rules.
Focus on breaking barriers, optimizing the environment, and strengthening guarantees, so that private enterprises can "invest with confidence", "invest with peace of mind" and "invest well"
First, improve access management, support participation in major projects, and let private enterprises "invest". The first is to strictly implement the management requirements of the "one national negative list" to ensure that "one list is exhaustive, and there is no single list", and ensure that all types of market entities can enter the industries, fields, and businesses outside the list on an equal footing in accordance with the law. Strengthen guidance on local implementation of negative lists, promptly investigate hidden barriers to local access, and promptly handle and publish typical cases of violations of fair access. We should coordinate development and security, and prevent one-sided or over-emphasizing security from reducing the space for private investment. The second is to support private investment in the construction of major engineering projects. Relying on the online project approval and supervision platform, we will promote major projects to private capital on a regular basis, and encourage private capital to actively participate in the construction of innovation platforms such as industrial innovation centers, technological innovation centers, and enterprise technology centers. The third is to promote the better implementation of the new mechanism of public-private cooperation. Relevant departments should pay close attention to the development of franchise supporting documents, take the lead in the promotion of the franchise model, local governments should standardize and promote the franchise projects within the scope of the government's authority, and clarify the implementation of franchise projects in accordance with laws and regulations. The fourth is to standardize the bidding qualification requirements and remove the "invisible barriers". For special areas that require the government to participate in the allocation of resources, the details of the rules should be publicly released to ensure that all types of ownership entities participate in the competition on an equal footing, and promote all kinds of bidding units to reasonably set and publicly release bidding requirements, and shall not set unfair thresholds for private enterprises such as qualification databases.
Second, the policy should be continuous and stable, create a good business environment, and allow private enterprises to "invest with peace of mind". The first is to implement policies to support private investment. We will further advance the reform of the administrative examination and approval system and the reform of the commercial system, speed up the handling of formalities for the preliminary work of investment projects, establish a regular communication mechanism with key private investment projects, and improve the mechanism for the government to keep its promises and fulfill its promises. The second is to improve the scientific nature of policy formulation and implementation. When formulating policies, strengthen communication with industry associations, chambers of commerce, and business entities, fully listen to their opinions, and openly collect social opinions through public media or network channels; The third is to further improve the level of regularization and rule of law in industry supervision. Establish the concept of equal status of regulators and supervised persons and abide by the rules, improve relief mechanisms, and enhance legal protection for private investment. Keep pace with the times and innovate regulatory methods, adapt to the development needs of new forms and models of the private economy, strengthen the application of digital technologies such as "artificial intelligence + supervision", keep pace with the times to innovate and optimize market supervision and service methods, and continue to promote the reform of "delegating power, delegating power, and providing services". Fourth, optimize the international business environment based on the rule of law. In view of the shortcomings and weaknesses in the business environment, we will take the initiative to benchmark against the World Bank's new business environment assessment system, actively learn from international best practices, and further reduce the institutional transaction costs of private investment. In addition, we should conduct in-depth and detailed analysis of public opinion noises, objectively look at the problems of non-standardization in the early stage of the development of private enterprises, eliminate the ideological and public opinion obstacles that affect the development of the private economy, and carry out administrative and legal punishments in a timely manner for some untrue voices that are deliberately distorted and maliciously smeared.
Third, strengthen the guarantee of factors and establish a library of private investment projects, so that private enterprises can "invest well". The first is to intensify efforts to solve the problem of difficult and expensive financing for private enterprises. Formulate targeted policies and management measures to support private investment and credit, earnestly implement the "due diligence exemption", and promote banking institutions to increase the tolerance of non-performing loans within a reasonable range. Give full play to the role of the real estate financing coordination mechanism, strengthen the management of loan withdrawal, loan breaking, loan pressure and loan refusal, effectively reduce the excessive risk aversion behavior of financial institutions to private real estate enterprises, and ensure the financial stability of private enterprises. The second is to expand the investment fields of policy-based development financial instruments. The scope of support for policy-based development financial instruments will be expanded from 22 areas in 8 categories to provincial highway networks, urban rail transit, advanced manufacturing and other fields, so as to attract more social capital to participate in the construction of major projects. The third is to establish a database of key projects for private investment. Relying on the project library, strengthen the communication and coordination of local development and reform, natural resources, ecological environment and other departments, and treat private investment projects equally and equally when allocating indicators such as energy consumption, land use, labor use, and environmental protection. Fourth, optimize the statistical caliber of private investment. At present, the statistics of private investment are not included in the projects of some government, state-controlled enterprises, foreign-funded enterprises and private investment cooperation, and only include the investment in kind of private holding enterprises registered with the market supervision department.
(Sun Xuegong, Director and Researcher, Decision Consulting Department, China Academy of Macroeconomics; Rong Chen, Deputy Director and Associate Researcher, Decision Consulting Department, China Academy of Macroeconomics)