Economic reforms, government measures are key: experts
Private investment in China slowed down in the first half of 2016, but analysts predicted Wednesday that the sector will enjoy a modest rally in the near future, due to upgrades in the domestic economic structure and government's efforts to revitalize it.
On Wednesday, the National Development and Reform Commission (NDRC) pledged that it will work to alleviate the difficulty of financing to private firms, and actively encourage them to raise capital through issuing bonds, according a statement on the NDRC's website.
The Chinese government will also strengthen support for public listings of high-quality private firms and lower the costs for private companies, the statement noted.
The country's top economic planner also said it will take steps to accelerate the implementation of current policies, like the 39 documents on encouraging private investment in key innovation sectors, which were released by the State Council, the country's cabinet, in 2014.
This is not the first time that the Chinese government has stepped up efforts to boost private capital.
The State Council has sent teams of officials and experts in recent months to regions that have been experiencing a rapid slowdown in private investment, to inspect local authorities' implementation of policies for private investors, Xinhua News Agency noted.
Earlier in July, Premier Li Keqiang also pledged to take steps to simplify the government reviewing process for investment in private programs.
All of these movements come amid a slowdown in private investments.
In the first half of the year, fixed-assets investment by the private sector amounted to 15.99 trillion yuan ($2.37 trillion), up by only 2.8 percent year-on-year.
It has tumbled 1.1 percentage points from the first five months of this year, according to statement on the website of National Bureau of Statistics (NBS) on July 15.
Prior to this year, records show that the growth rate over the last decade was over 20 percent, Xinhua reported on July 28.
In the first half of 2016, investment from the private sector accounted for 61.5 percent of all total fixed-assets investment, a decline of 3.6 percentage points compared with the same period last year.
Experts noted that some of the reasons behind the lackluster investment from the private sector was an unfavorable global economy combined with industrial overcapacity.
"Over 50 percent of private investment goes into the traditional manufacturing sector, which is already plagued with overcapacity. Besides, sluggish global economic growth has led to a decrease in demand both from domestic and foreign markets as well as the falling price of industrial products," Tian Yun, director of the China Society of Macroeconomics Research Center, told the Global Times on Wednesday, noting that this makes enterprises less willing to invest.
Additionally, lengthy government review periods for private investment and policy barriers imposed by local governments also contributed to the trend, Wang Danqing, a partner at the Beijing-based consultancy firm ACG, told the Global Times on Wednesday.
Future prospect
Despite the deceleration in private fixed-assets investment, analysts predicted the trend will not continue in the future.
"The recent statement issued by the NDRC addresses the factors contributing to the phenomenon and ameliorates the overall investment environment," Wang said, noting that this shows that the Chinese government is paying extensive attention to this issue.
Anbijie Group, a high-tech company based in Southwest China's Chongqing, used to be burdened with excessive approval procedures for spending the 100 million yuan in borrowings from banks at the beginning of 2016.
But the situation changed after a group of NDRC officials visited this firm in May, which simplified the review process and rendered the company with greater autonomy for spending the money, an employee of the company told the Global Times Wednesday.
"If the measures are carried out effectively, the deceleration will be reversed," Tian noted.
Experts also noted that, influenced by the decline in the manufacturing sector, private capital expenditures are flowing into the services and newly rising high-tech industries, which yield high returns.
For example, although the growth rate for private investment in the manufacturing sector only reached 2.5 percent in the first half of 2016, the growth rate for private investment in the high-tech industry stood at 13.1 percent, according to a statement published on the State Council's website.
