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China to rope in more private capital to halt economic slowdown

In a bid to attract more investment to halt the economic slowdown, China has decided to allow more private capital into the market including equity stakes in projects with state funds to develop a mixed ownership economy.

According to a decision taken at the key leadership meet of the ruling Communist Party of China (CPC) this week, non-state-owned capital will be allowed to take equity stakes in projects featuring investment by state-owned capital, and employees of multi-ownership enterprises will be able to hold shares in their companies.

The second largest economy slowed down considerably in the last two years from double digit growth to around seven percent.

The country will vigorously develop mixed ownership to improve the basic economic system while keeping the dominant role of public ownership, with the state-owned economy playing a leading role, while encouraging, supporting and guiding the non-public sector, enhancing its vitality and creativity, according to the decision details released on Friday. The decision called for cross shareholding of state capital, collectively owned capital and non-public capital to maintain and increase the value of stated assets and achieve common development of various ownerships, state-run Xinhua news agency reported.

The CPC Central Committee decided to support the development of the private economy, and stimulate its vitality and creativity, President Xi Jinping, who is also the general secretary of the CPC explained.

Property rights in the public sector will be protected, so are those of the non-public sector, Xinhua quoted Xi as saying.
The CPC also decided to enhance regulation of income secondary distribution through taxation.
An information systems on personal income and property will be established among efforts to narrow income gaps between urban and rural areas, different regions and sectors.

China is stated to have highest Gini coefficient index, reflecting the gap between rich and poor reached 0.474 in China in 2012, higher than the warning level of 0.4 set by the United Nations.

A document approved by the Plenum said China aims to bring about an income distribution pattern the document said.
It also said China will create a standardised risk-warning system to better handle government debts.Mounting government debts have led to concerns over the health of the Chinese economy.

The creation of a risk-warning system, as part of the reform plan to improve the country's budget management, highlights the CPC's effort to deepen its reforms in the fiscal and taxation system in a bid to overhaul the world's second largest economy.

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