Government urged to help private sector

It is already urgent for the government to put in place effective measures to facilitate a proactive financing environment for the nation's private sector, which has for years injected vitality into the economy but has recently been wading through the downturn in the economy, business executives and experts said Monday.

"In the current context, fundraising is really a difficult task for private companies, small- and medium-sized enterprises (SME) in particular," Hu Bo, chairman and founder of Ciming Health Checkup Management Group Co, a major private healthcare provider in the country, said Monday at a forum in Tianjin prior to the Annual Meeting of the New Champions, also dubbed the Summer Davos, to be held Tuesday through Thursday.

Hu presented a grim outlook on the nation's private sector as a whole, although his company's IPO application to the Shenzhen Stock Exchange has gained approval from the securities regulatory authority in July. The company is now lining up for stock market debut, but it remains unknown how long it would take, according to Hu.

Currently, many enterprises in the high-tech industry are SMEs, which are confronted with a host of problems, the most pressing of which is credit crunch, said Zhao Guofeng, chairman of Tianjin Jiuri Chemical Co.

It is hard for the government to carry out policies aimed at shoring up lending for small and micro enterprises, which make up a large part of the country's private sector, said Hu, calling for the government to offer instant assistance to private companies in the real economy sectors.

Cash-thirsty private companies have resorted to all possible means of funding to survive the hard times, including calling for help from the underground private financing vehicles, resulting in a tailspin in Wenzhou, a hubbub of private enterprises in costal Zhejiang Province. Taking note of the mounting concerns over financial stability, the State Council, the country's cabinet, announced in late March plans to establish a pilot zone in Wenzhou to rein in rampant financing activities out there, as well as offering financial help to small and micro companies.

"Some economists and experts have voiced doubts over potential risks of such an initiative to restructure the private financing sector, but I believe it would be good to expose the risks and then take effective measures to help solve the problems," said Xian Guoming, assistant to the president of Nankai University.

A key hurdle to the private firms is their inability to secure funding from banks, as banks generally believe it involves much higher risks providing loans to small private firms compared to big State-owned enterprises, Xian said, noting that the government should further continue reforms of the financial services for the SMEs.

"Bolstering private financing vehicles with support from the government could be a more efficient and safer way to help boost private lending," Xian suggests.