The role of China's private sector in the economy will become more dominant as it becomes the centrepiece of economic reform and development, according to Credit Lyonnais Securities Asia (CLSA).
Privately run businesses and collectives in rural areas account for about 50 per cent of gross domestic product but this was expected to surge to 75 per cent in the next five years in view of their fast-paced growth, said Erwin Sanft, head of the investment bank's China research team.
The rosy outlook was bolstered by the support of the central government and the country's imminent admission to the World Trade Organisation.
With entry to the WTO, private firms in China would be the winners, said Andrew Rothman, China strategist at CLSA.
'The concessions China made to foreign firms also apply to domestic private companies, opening up new avenues for financing and taking down barriers to market access,' Mr Rothman said.
Private enterprises have long complained that restrictions and tight credit policies at state banks hinder development.
