Private enterprises usher in a new era of equal competition under the law

Release Time：

2017-08-14

Since the Third Plenary Session of the Eleventh Central Committee of the Communist Party of China (CPC), over the past 35 years, China's private enterprises have grown from less than 100,000 to over 10 million, accounting for the vast majority of Chinese enterprises, with private capital exceeding 60% of the total social capital. However, for many years, the development of the private economy has been hindered by an invisible "glass ceiling." Bao Yujun, chairman of the All-China Federation of Industry and Commerce, has been a pioneer in calling for the breaking of this "glass ceiling." Having served as vice chairman of the All-China Federation of Industry and Commerce and vice secretary-general of the National Committee of the Chinese People's Political Consultative Conference, he has spent decades both inside and outside the system advocating for equal market status for private enterprises. He believes that the improvement of China's market economic system requires dual reforms in concepts and policies, and that the top priority of the reform is to correctly position the relationship between the government and the market, and further stimulate the vitality of commerce and the market. In response to the positive signals released by the "Decision of the Central Committee of the Communist Party of China on Some Major Issues Concerning Comprehensively Deepening Reforms," Bao Yujun pointed out that the system affirms the equal status of the private economy and the state-owned economy, and that all market entities can enter fields outside the negative list in accordance with the law, marking "a new era of equal competition for private enterprises." 21st Century Business Herald: How do you interpret the signals released to private enterprises in the decision of the 18th National Congress of the CPC? Bao Yujun: The Third Plenary Session of the 18th Central Committee of the CPC marks the entry of China's private economy into a new era. This is mainly reflected in the shift from primarily relying on policies to primarily relying on systems. Policies are certainly important, as policies and strategies are the lifeblood of the Party. Without the reform and opening-up policy, and without the series of policies encouraging, supporting, and guiding the private economy, there would be no private economy today. However, policies are based on differences in ownership, and policies formulated for different ownership economies inevitably lead to discrimination based on ownership. For many years, people have called for equal competition, but in reality, it has been difficult to achieve equality, because policies differ, and the formulation and implementation of policies are greatly influenced by human factors, thus giving rise to rent-seeking and corruption. The 18th National Congress proposed the concept of three equalities (equality of rights, equality of opportunity, and equality of rules), and the Third Plenary Session of the 18th Central Committee promoted this concept to institutional construction, emphasizing that both public and non-public economies are important components of the socialist market economy and important foundations for the economic and social development of our country, and that the property rights of public and non-public economies are equally inviolable. 21st Century Business Herald: What changes will the change in the system bring? Bao Yujun: The Third Plenary Session of the 18th Central Committee emphasized that it is necessary to significantly reduce the government's direct allocation of resources, promote resource allocation based on market rules, market prices, and market competition, and achieve maximum efficiency and optimal efficiency. Establish fair, open, and transparent market rules, implement a unified market access system, and on the basis of formulating a negative list, all market entities can enter fields outside the list in accordance with the law. The decision also explicitly announced the abolition of unreasonable regulations on various forms of non-public economies, the elimination of various hidden barriers, and the formulation of specific measures for non-public enterprises to enter franchised businesses. This clearly tells private enterprises that if you want to obtain resources and gain a competitive advantage, you must improve your core competitiveness, not rely on special relationships with government officials! In addition to explicitly announcing the improvement of the property rights system and the inviolability of the property rights of both state-owned and private enterprises, the Third Plenary Session of the 18th Central Committee also made a series of institutional arrangements in terms of competition and cooperation. For example, actively developing a mixed ownership economy, various ownership enterprises can cross-hold shares, encouraging non-public enterprises to participate in state-owned enterprise reforms, not only holding shares but also controlling shares. In addition, it is proposed that social capital can participate in the investment and operation of urban infrastructure construction through franchising; in rural revitalization and urbanization construction, private enterprises can better play their advantages in new rural operating models. 21st Century Business Herald: Does this mean that private enterprises can celebrate the arrival of a new era? Bao Yujun: Not yet. In the past, private enterprises have called for various forms of equality, and now the state has granted private enterprises equality in terms of the system, and the market has been fully opened to you. The ball is now in the court of private enterprises: "I give you everything, can you get in?" This serves as a wake-up call for private enterprises. You have to weigh your own strengths and weaknesses, innovate, and carry out mergers and reorganizations in order to have the strength and opportunity to enter monopolistic industries and new industries and participate in this round of competition. This round of state-owned enterprise reform is completely different from the one in the 1990s. The previous round of reforms focused on "closure, suspension, merger, and transformation," while this round is a classified reform, distinguishing between public welfare, basic, and competitive categories, and achieving diversification of equity through marketization and securitization. This round of reforms presents enormous opportunities, but also enormous challenges, particularly for private enterprises.

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