Private enterprises still facing uphill battle

There has been improvement in China's business environment in recent years, but private enterprises are still facing difficulties in many sectors, one management staffer at a private enterprise said.

Ye Chao, head of brand management department for solar power company GCL New Energy Holdings Limited, told China Daily website in a telephone interview Monday the company has seen progress in improving the business environment in recent years, such as market-oriented bidding and tax cuts.

But high-cost financing is still a burdensome issue for the Hong Kong-listed company. Ye used bank lending as an example, pointing out that private companies in the power generation industry generally only get interest rates 15 percent higher than the benchmark on loans, while State-owned enterprises in the same industry enjoy lower-than-benchmark rates.

Ye said he had low expectations to get funding through issuing corporate bonds and that private companies have fewer advantages than central SOEs.

According to a Bloomberg report seen by China Daily website at the China Development Forum on Saturday, private firms account for a small share of bond issuances.

The report said 70 percent of outstanding corporate bonds in China's market are issued by central or regional SOEs. And the actual share of private firms in the bond market is even lower, as remaining bonds still contain a considerable share of government-related entities such as local government finance vehicles.

Chinese Premier Li Keqiang said in his government work report earlier this month that by following the principle of competitive neutrality, the government will ensure enterprises under all forms of ownership be treated on an equal footing regarding access to factors of production, market access, licenses, business operations, government procurement and public bidding.

Private enterprises play a vital role in China's economic development, contributing 50 percent of fiscal revenue, 60 percent of GDP, 70 percent of technical innovation, 80 percent of urban employment, and 90 percent of total enterprises and newly-added employment, said Liu Shijin, a member of the National Committee of the Chinese People's Political Consultative Conference, at a press conference during this year's two sessions legislative meeting.

Some unspoken rules still exist when it comes to market access or getting loans, he said at the CDF Saturday, adding the perception of government support for SOEs gives these enterprises more favor.

Liu, who is also former vice-president of the Development Research Center of the State Council, said lack of financial institutions and products which target private and small businesses also leads to shortages of affordable financing.

Considering competitive neutrality, Liu said government should encourage all enterprises to be high-quality and strong while not necessarily emphasizing size, as the latter could be decided by the market.