Private firms promised a better deal
Two Chinese ministers yesterday promised a fairer deal for domestic private companies, saying they would be allowed to issue bonds and enjoy the same treatment as state and foreign-invested firms.
Zeng Peiyan, minister of the State Development and Planning Commission, and Li Rongrong, minister of the State Economic and Trade Commission, pledged that the economic playing field would be levelled for all. They were speaking at a news conference on the third day of the 16th Communist Party Congress.
Other pro-business steps are apparently already being taken. Sources said Li Dongsheng, chairman of TCL Corporation, and Zhang Ruimin, chief executive officer of the Haier Group, were frontrunners to become Central Committee members, representing the business sector. Their firms are two of the mainland's biggest manufacturers of home electrical appliances, computers and mobile phones.
Until now, private companies have been unable to issue bonds. Mr Zeng said that his commission was in favour of granting private firms the right to issue bonds. Such enterprises must have a good reputation, strong finances and prove attractive to the public.
'In these circumstances we will approve bond issues,' he said, adding that this year state firms had raised 30 billion yuan (HK$28.3 billion) from bond issues. Bond issues are looked on positively because they reduce banks' credit burden and risks.
Private businesses - which account for at least a fifth of the economy - complain that they cannot obtain bank credit as easily as state firms. They also claim they are excluded from sectors like publishing, finance and insurance now being opened to foreign firms as part of China's accession to the World Trade Organisation.
However, Mr Li Rongrong claimed that state banks had no responsibility to lend to state companies.
'They make lending decisions without distinguishing the kind of ownership. In terms of taxes, state and private firms are treated the same. All players in the market can enjoy equal competition. With reform, this objective can be achieved,' he said.
'Sectors open to foreign companies are open to domestic private firms. At the end of last year, we had 2.03 million private companies and the number will grow in the future.
'By July this year we had 42,900 state firms, down from 46,800 at the end of last year and 100,000 in 1990. The number will continue to fall but the quality will improve. Quality is more important than quantity,' he said.
Mr Zeng said private firms in east China have on their own initiative set up credit co-operatives which needed government regulation.
Asked about unemployment, Mr Zeng said that 24 to 25 million people had been laid off from state companies, of whom about 17 million had found new jobs, mostly in small and medium-sized private companies or working for themselves. Those still without work would contribute to an unemployment level of about four per cent by the end of the year.
Many economists say this official prediction will be less than half the actual level, due to discrepancies in the calculations and the government's reluctance to admit the extent of the problem.
Mr Zeng and Mr Li kept referring to the last 13 years, the period during which Jiang Zemin has been head of the Communist Party, instead of the previous five since the last congress, which is the traditional term of reference for such a meeting. There was no congress in 1989, when Mr Jiang took over because his predecessor Zhao Ziyang was sacked. He has been under house arrest in Beijing ever since.
Mr Zeng and Mr Li evidently wanted to focus on Mr Jiang's achievements in office. This is his last congress and he is expected to hand over the post of party general secretary to Hu Jintao on Thursday. Both ministers quoted extensively from Mr Jiang's speech to the congress on Friday.
