By Zhang Bin(張斌) and Li Chunping (李春平)
Issue 583, Aug 20, 2012
News, page 5
Translated by Zhu Na
Original article: [Chinese]

In 2005 and 2010, the State Council launched "The 36 non-public ownership economy clauses" (非公經(jīng)濟36條) and the "36 private investment clauses" (民間投資36條) respectively to guide private capital into sectors that had traditionally been dominated by monopolies, such as the oil and railways industries.

These two "36 Clauses" are considered important policy announcements when it comes to the encouragement of the investment of private funds in China. But after being in effect for several years, the clauses haven't made much of an impact.

At the beginning of the year, after much encouragement from the State Council, all departments and ministries launched 42 detailed implementation rules for the "36 private investment clauses."

Recently, the Economic Observer met with with Zhuang Congsheng (莊聰生), vice president of the All-China Federation of Industry & Commerce, to discuss the new rules and the likelihood of more investment opportunities being opened up to private capital.

The All-China Federation of Industry & Commerce is an official body that aims to represent the interests of private business in China.

Zhuang explained to the EO some of the barriers that currently exist in relation to private companies that want to compete on an equal footing with large state-owned enterprises.

Zhuang also explained that the reason these barriers exist is that the large SOE are trying to protect their own interests.

Zhuang said there are many notable and innovative ideas included in the 42 detailed implementation rules. One is that the scope of access is more detailed and it explicitly lays out the fields where private investment can enter. It also lists the means and the protection measures for investing in these fields.

The 42 detailed implementation rules list more avenues for private investment as well. It not only allows joint-stock companies, but investors can also participate in the restructuring of state-owned enterprises through investing in shares, purchasing share rights, and gaining convertible bonds, among other methods.

Zhuang said that the introduction of the 42 detailed implementation rules is having a great effect in boosting private investors’ confidence.

However, there are some notable areas of concern not mentioned in the rules that are relevant to those trying to invest in sectors dominated by state-owned enterprises. How to allocate management power and what rules there are regarding competition within the industries still need to be addressed. Zhuang says many enterprises hope the government can provide more detailed policies when it comes to these areas.

Zhuang also drew attention to Premier Wen Jiabao's recent calls for visible action that would give people confidence that private investment was more welcome in the areas of railways, urban investment, resources, telecommunications, health and education.