Xin Yi

Changchun, a traditional industrial base, is increasingly looking towards private investment as a source of economic revitalization.

While State-owned enterprises (SOE) were the dominant force in the city's economy in the past, local authorities are now highly focused on growth of the private sector.

By the end of last year, the volume of private economy of the city accounted for 52 per cent, according to mayor Zhu Yejing.

Statistics show in the first half of this year alone, the number of individual businesses registered with the local commercial and industrial administration stood at 113,000.

And business revenue of the private sector of the city reached 71.89 billion yuan (US$8.88 billion), increasing 25.6 per cent compared with the same period last year.

"We will build a more favourable environment for the budding individual entrepreneurs and put the growth of private economy onto the fast track," Zhu said.

Favourable environment

As an effort in this direction, government officials from the city have recently paid visits to the regions along the southeast coast, like Jiangsu Province and Zhejiang Province, which have seen far greater levels of privatization.

Based on findings from these trips, detailed plans were laid out to bolster growth of the local private sector.

At the beginning of this year, an official document was issued, easing restrictions on access to individual investment.

Unless explicitly prohibited by the State, private capital is allowed access to any field of investment.

Chinese and foreign investment capital is treated alike in terms of market access. Business operations that allow inflow of foreign capital are now open to Chinese private investors.

In addition, SOEs that were earlier denied this option can now open their doors to private funds.

Traditionally individual investment in Changchun was clustered around wholesale, retail, dining and entertainment sectors.

The situation has been changed substantially in recent years. Encouraged by the latest investment policies, private capital now tends to flow into a variety of areas.

This year, 21 private enterprise associations, covering 36 industries as varied as food and auto parts, were set up.

Private funding is particularly active in intermediary service industry.

Figures show that more than 500 private-invested companies are involved in 18 categories of intermediary services, including legal and accounting services, taxes, information consultancy and guarantee.

Financing is one major stumbling block faced by the new and growing private sector.

Changchun now has nine guarantee agencies, together providing a guarantee of 1.05 billion yuan (US$130 million), thus considerably easing the situation.

"The rapid growth of our hospital is greatly credited to the government's supportive policies," says Li Zhipeng, director of a private-funded hospital with annual revenues reaching 5 million yuan (US$617,284).

The hospital initially covered just 1,000 square metres but now has an area of 6,000 square metres and a staff of 160.

Private-funded technological companies in the Changchun High Technological Development Zone, operating in areas like electronic information, biological pharmaceuticals and new materials, account for 80 per cent of the total private technological companies in the city.

Due to its investment-friendly environment, the zone is a favourite investment destination in the city.

As the cradle of the Chinese auto industry, Changchun, where the First Auto Works is headquartered, has also capitalised on this advantage, with private-invested auto related industries growing rapidly in the zone

Constructive contribution

The city's residents are beginning to enjoy greater prosperity and security from this boom in private investment.

Besides providing much needed employment, private enterprises are going a step further, by helping to fund training centres, which provide unemployed locals with job skills.

As part of their social responsibility, private businesses are also making financial contributions to building, extending and repairing roads.

While several of these enterprises take on active part in the cultural activities of local residential communities, some are also involved in charitable deeds.

"Thanks to favourable policies, I had the opportunity to develop my own business, and now as a successful businessman, in return, I wish to do more to help those in need," said Liu Jiqing, a local private shop owner.

(China Daily 12/31/2005 page5)