Private sector essential to China's economic health

The government's support for and development of the private sector will be key to maintaining the health of China's economy, according to economists attending the seventh China International Private Equity Forum.

Authorities should give more policy support to strategic new industries and private businesses, said Lian Ping, chief economist of the Bank of Communications.

Xia Bin, a counselor for the State Council and a former member of the monetary policy committee of China's central bank, said China should give full play to the private sector and market forces, as well as open all sectors to private investment in order to reduce risks lurking in the economy.

China should focus on reform to tackle systemic risks related to local government financing platforms, possible real estate bubbles and shadow banking while maintaining the slowest growth rate it can tolerate in order to fend off risk, Xia said.

"The economic slowdown is reasonable and signals that China's economic structure is being optimized, which can offer an opportunity for the private enterprises," Xia said.

China's economy grew 7.7 percent year on year in the first quarter, down from 7.9 percent in the fourth quarter of last year but still above the government target of 7.5 percent for the whole of 2013, official data showed.

Zhang Weiying, former president of the Guanghua School of Management of Peking University, urged speeding up the privatization of less-efficient state-owned enterprises.

"This could help to optimize the economic structure and boost entrepreneurs' confidence. It would be conducive to the sustainable and healthy growth of the economy," Zhang said.

"Many unknown small companies have ultimately became influential international groups through mergers and acquisitions," said Charles J. Morton, president of the Association for Corporate Growth (ACG), one of the hosts of the three-day forum, which ended on Saturday.