(Bloomberg) — China’s top economic planner is creating a new department to help private businesses, the latest move by the government to restore confidence and spur growth in the sector.
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The National Development and Reform Commission on Monday announced that the Private Economy Development Bureau will be responsible for monitoring and analyzing the industry situation, as well as coordinating and drafting policies to promote its development.
Beijing has unveiled a drip-feed of policies in recent months intended to revive private companies and attract foreign investment, with President Xi Jinping over the weekend vowing to ease market access and create opportunities for global cooperation. Have sworn
“It is rare for a government to set up an agency with expertise in a certain area. It sends a policy signal to guide expectations in an institutional manner,” said Bruce Pang, head of research and chief economist at Jones Lang LaSalle Inc.
Private companies are the major employers in the economy and contribute to more than half of the country’s real estate investment. Years of regulatory crackdown and pandemic controls have shattered confidence in the sector, with once-dominant companies such as Alibaba Group Holding Ltd shrinking dramatically.
Concerns about private enterprise have been severe this year as the economy struggles to deal with a long list of challenges ranging from an asset crisis and falling exports to deflationary pressures.
NDRC official Zhang Shixin said at Monday’s briefing that the new bureau would regularly talk to companies and help them solve their core problems, as well as support their efforts to improve international competitiveness.
In July, the ruling Communist Party and government pledged to treat private companies on a par with state-owned enterprises – a move seen at the time by investors as a blueprint for future support. The NDRC later released a 17-point plan to revive private investment, as they called for trillions of yuan in funding for projects covering everything from transportation and water conservation to clean energy.
Efforts to encourage private investment are becoming more aggressive. Kang Liang, vice chairman of the NDRC, said at Monday’s briefing that local governments planned private investment of about 3.7 trillion yuan ($509 billion) for more than 3,500 projects.
The creation of a specialized agency “signals that the work will be a long-term effort,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc. However, he said key issues still remained as to what specific steps would be taken to improve the environment for business operations and “enhance policy transparency and predictability”, among other measures.
Policy forecasting has been a particularly important issue for foreign companies. US Commerce Secretary Gina Raimondo said last week that companies operating in China have told her they find the country “disadvantaged to invest” because of the risks.
Monday’s briefing did not include details about possible support for foreign companies — a sign that the bureau is mostly focused on helping domestic companies, according to Jones Lang LaSalle’s Pang.
“The new bureau’s stated aim of helping private companies improve their international competitiveness raises the question of whether the initiative will involve foreign enterprises,” said Jens Eskelund, president of the EU Chamber of Commerce in Beijing.
The American Chamber of Commerce in China also welcomed the move, with Vice President Roberta Lipson saying the new bureau was “another sign that the government is willing to use all its tools to strengthen the economy.”
The NDRC also said on Monday that it is encouraging large banks to review and consider financing private projects, and has asked banks, including China Development Bank, Industrial and Commercial Bank of China Ltd and China CITIC Bank Corp. 715 such initiatives have been recommended to the lenders.
The commission also wants funding for private industry projects to come from real estate investment trusts, or REITs. The country has experimented with REITs in recent years as a way to take advantage of the equity market to finance infrastructure projects and spur growth.
Kang said the commission has recommended a wind power project to China’s securities watchdog, which has the ability to approve the issuance of infrastructure REITs. He added that officials hope to do the same “as soon as possible” for other eligible REIT projects covering industries such as big data, consumption and logistics.
The Ministry of Industry and Information Technology said at the same briefing that it would conduct a nationwide inspection to ease the burden on businesses and ensure that favorable policies are implemented. Vice minister Xu Xiaolan said the agency would also campaign for small companies to repay outstanding loans to ease their financing pressure.
–With assistance from Colm Murphy.
(Adds additional context, feedback from business chambers and economists.)
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