China looking at boosting private role in industry

[May 26, 2009]  BEIJING (AP) -- China says it may encourage private investment in state-controlled industries such as railways, oil and power generation in an effort to boost the efficiency of the world's third-largest economy.

The announcement Monday by China's top planning agency comes as Beijing tries to boost growth and combat the impact of the global downturn. It would affect areas deemed strategically important and key to national security.

The government will "speed up research into encouraging private investment" in oil, power generation, telecommunications and other fields, the National Development and Reform Commission statement said.

The move is also aimed at countering monopolies or quasi monopolies in various industries, a legacy of decades of centralized planning.

Major state-owned companies, many of which are under direct Cabinet control, enjoy strong advantages in obtaining financing, share listings and contracts. Usually headed by Communist Party officials, they can also wield strong sway over setting industry policies.

While that may not change, the NDRC statement reiterated the leadership's concern over structural problems that have been aggravated by the global downturn and require fundamental reforms.

The statement gave no indication that foreign investment might be allowed in such fields or when a decision might be announced.

But the communist government's willingness even to consider such a change reflects urgency over reviving economic growth.

Beijing has been building up elite government-owned companies to dominate domestic industries such as oil, telecommunications and finance. But officials acknowledge such companies are so far much less competitive than their private counterparts elsewhere.

China has sharply reduced the government's role in the economy since the launch of reforms in 1979. But economists says it has to push ahead with more sweeping changes if it hopes to continue economic growth and boost incomes.

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Chinese Cabinet (in Chinese): http://www.gov.cn/

[Associated Press]

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