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China to Revitalize Private Sector Investment

China to Revitalize Private Sector InvestmentChina to Revitalize Private Sector Investment

China has promised to implement measures to improve laws and government services for businesses in response to slowing private investment growth, state media reported.

China is counting on the private sector to invest more in the economy as the government tries to shift away from state-run heavy industry to a more entrepreneurial and services-led growth, Reuters reported.

The measures come after a month-long survey of hundreds of private companies, the official Xinhua news agency reported, without detailing the measures.

The study found smaller market demand, overcapacity, higher labor costs and bad policy implementation had contributed to slower investment growth, Xinhua reported.

Private-sector fixed-asset investment, which includes land, equipment and buildings, accounted for more than 60% of overall investment in January to April, government data showed.

But the amount grew just 5.2% from the same period a year earlier, its slowest rate since data collection began in 2012. The rate also compared with around 10% last year, and as much as 25% in 2013.

The sector provides a third of all jobs in China and creates 90% of new urban jobs, state media have reported.

Meanwhile, IBTimes reported that Chinese companies can buy their way into the United States and Europe. But American and European companies can’t do the same, a point that is generating friction among the largest economic blocs in the world.

The 2013 acquisition of Smithfield Foods by a Chinese competitor and this year’s announcement ChemChina would buy Syngenta, a Swiss developer of agricultural chemicals and seeds, have driven home a new reality in the global economy: China is now a foreign investor in a way it has never been.

As China’s economy slows, its major companies are seeking better returns elsewhere in the world, prodded by a government that envisions a corporate sector that bestrides the world like a colossus. But other countries see instead the emergence of giants who enjoy a protected market in China while they face Chinese competition.

“Something has to change,” James Zimmerman, chairman of the American Chamber of Commerce in China, told a group of journalists visiting Beijing under the auspices of the East-West Center, a Honolulu think tank. “It’s more than abstract.”

Financialtribune.com