Private Economy to Be Prioritized in Jilin

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In a bid to create more job opportunities and help increase residents' incomes, Jilin Province in Northeast China will speed up the development of the private economy in the next three years.

"Promoting the growth of the private economy is the priority of the local authorities' work agenda in the next few years," said Wang Min, secretary of the Jilin committee of the Communist Party of China, at a recent work conference on private economy.

Wang said the province will establish 10,000 new private enterprises (mostly small scale) each year over the next three years, creating 100,000 jobs.

By 2009, the number of private enterprises is expected to reach 100,000 and that of household firms will touch 1 million. Taxes paid by private enterprises will account for 40 percent of the province's total fiscal revenue, while employment opportunities offered by these firms will comprise 75 percent of Jilin's job market.

Further, 53 percent of the province's total fixed-asset investment will be contributed by private enterprises.

Last year, output value generated by private enterprises accounted for 40 percent of Jilin's gross domestic product and these firms created 54 percent of the province's job opportunities.

In three years, the number of medium-sized private enterprises each with business revenue surpassing 100 million yuan will reach 200, Wang added. The number of large private enterprises, with business revenue of more than 1 billion yuan each, is expected to hit 15 within the same period.

At present, the private economy is seen as an important driving force for Jilin's economic development, contributing to the increase of fiscal revenue and creating more employment opportunities for urban and rural residents.

However, the scale of Jilin's private economy is still small compared with coastal provinces such as Guangdong, Jiangsu and Zhejiang.

The number of private enterprises in Jilin is only one-eighth of Jiangsu's, one-seventh of that in Guangdong and one-sixth of Zhejiang's.

The coastal provinces have numerous large private enterprises with wide recognition in the domestic market. For instance, Jiangsu has 370 large private enterprises, each with a registered capital of more than 100 million yuan, while the number for Zhejiang is 283, whereas Jilin has only nine.

Shortage of funds and human resources and an outdated management system are the reasons behind the slow pace of growth of Jilin's private economy, Wang explained.

"The slow pace of the sector's growth leads to the pressure of employment and bottlenecks the increase of local residents' incomes. So it is the right time for us to promote the development of the private economy," he noted.

Easy market access

To promote the growth of private economy, the local governments will take concrete steps to improve the business environment for private enterprises.

One of the governments' first measures will be lowering the market access threshold for private enterprises.

All the business sectors, unless prohibited by the law and State policies, are open to the establishment of private enterprises.

Private businesses enjoy the same treatment as offered to State-owned and foreign-invested enterprises, in terms of investment approval, fund raising, taxation, land use, foreign trade and foreign economic and technological cooperation.

The local governments will, in fact, offer greater preferential treatment for private enterprises, which will include tax relief, financial support and human resources support.

Hence, private enterprises engaged in operating educational institutions, service entities dedicated to aged and disabled residents, or job service institutions, will be exempt from business tax.

Enterprises opening profitable medical service entities will be exempt from business tax, real estate tax and land use tax for three years. If they open not-for-profit medical service entities, they will be exempt from all taxes, except personal income tax.

Tax relief will also be offered to private enterprises if they are engaged in the research and development of new products, high technology and new techniques.

Raising of funds

Fundraising is the biggest problem dogging the development of private enterprises.

To counter this, the local government is now cooperating with the province's financial institutions to establish a loan service platform for private enterprises, especially the small and medium-sized ones, Wang said.

An important part of the service platform is the construction of a credit guarantee system for small and medium-sized enterprises.

The system is composed of guarantee institutions funded by both government and non-government entities. Its main role is to rate the creditability level of private enterprises by establishing creditability databases and guide the financial institutions to offer loans according to the rating.

The province's commercial banks and policy banks, such as the Jilin branch of the National Development Bank and Agricultural Development Bank, are expected to offer 3 billion yuan worth of loans to small and medium-sized enterprises every year, said Wang.

In terms of human resources support, the local government will establish a special fund to help train professionals for private enterprises. Investment in the training programs will amount to 10 million yuan annually.

In addition, the province will build special industrial parks for private enterprises, helping them form industrial chains, expand operational scale and improve competitiveness.

The government's other measures to support private enterprises also include guidance of business start-up, information network construction, marketing assistance, management consultation and legislative service.

(China Daily March 22, 2007)

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