What is the Power for Private Investment?
The driving forces for development of all the things comes mainly from the internal factor rather than external which always plays the supporting role. In the years of clearing residual capitalism, private economy developed with overwhelming vitality though it was regarded as the supplementary power. At the times of good political circumstances when “Two Adherences” is put into constitution, law and 36 rules of the State Council, the private economy should be more vigorous.
On the current development circumstances, what should be released, exempted, invested, supported and relieved are all in place from the central government. From the top engineering to the final implementation, since the founding of new China till now, it can be said that there is no more effort like this to encourage the private investment, but why the growth rate of private investment keeps going down? New data shows that the growth rate of private investment in the first quarter is only 5.7%, a decrease of approximately 60% than last year, and it is only 4.3% in April, and even worse in May which is only 1.0%.
Meanwhile, we see that enterprises directly controlled by the central government are competing to be the land king; the listed companies and three board companies are enthusiastic about stock financing. The growth has been raising, nearly to the ceiling limit. The striking contrast with private investment tells us that the problem is not mainly from the government. Nine inspection teams led by nine ministers found that the old problem remains the main cause. I had been the President of Industry and Commerce Association and Chamber of Commerce for about ten years. The problem was existing while I was in the Chamber of Commerce, when the private investment into entity economy play a dominant role.
Though the Central government’s spirit of administration simplification and power decentralization is worth encouraging, our major effort should be put on proper mental orientation. If people’s mind remain unchanged, entrepreneurship spirit not established and values deviate from the normal, the private investment could only make the stock market out of control, real estate industry uprising and bulk commodity deviated.
In the group meeting with China Democratic National Construction Association and Association of Industry and Commerce, President Xi reiterated the CPC’s “Three Unchanged” policy towards non-public economies, namely, “The status and role of the non-public sector economy in our economic and social development remain unchanged; our policies to encourage, support and guide non-public economic development remain unchanged; our commission to create a good environment and provide more opportunities for the development of non-public sector remain unchanged.” On the other hand, he put forward specific requirement for on-public sector personnel “the proper development of economists in non-public economies is the precondition for the proper growth of non-public economies.”
It is clear that the proper development of economists in non-public economies is the precondition for the proper growth of non-public economies. This is fundamental to establish proper private investment orientation; otherwise, private investment will not flow into the entity economy even all the taxes are exempted. Let’s have a look at it. We put more weight on investment policy on entity economy; likewise, we also put more weights on virtual economies in terms of real estate, gold, stock, futures, privately and publicly offered funds transactions. More weight means more incentives; people like it, even with high risk. As said by an entity economy entrepreneur, as a gentlewoman started being a prostitute and get paid, she will never wish to be a gentle woman any more. When we exempted the traditional agricultural tax which has been existing all the time in history, we found that farmers no more like to engage in farming work.
No matter in what area, we have to focus on the fundamental value, correct investment concept and proper wealth value; otherwise, the private investment is like a horse out of control.
With this clear in mind, President Xi told the players in non-public economy that “we shall strengthen self-study, self-training and self-improvement”. He particularly pointed out that “we should be open to this” and “CPC has the same requirement internally for the cadres, which is more strict…we shall constantly strive to become stronger towards the complete perfection.”
Economic downturn shall not be the excuse for decrease in private investment and passive action; instead it should be a baptism for entrepreneurs’ virtue and composure.
It is surely important to supervise the implementation of private investment. However, it is more important to supervise the implementation of proper education and orientation by governmental and social organizations for players in non-public economies.
