China broadens private capital access to public sector

Analysts say transforming government functions, promoting private enterprises and greater opening of the service sector will be high on the government's reform agenda at the Third Plenary Session of the 18th Central Committee of the Communist Party of China.

"So far, infrastructure and utility projects have been heavily dominated by government investment, so there is great potential for private business to invest and make a difference," said Fu Tao, Director of Tsinghua University's Water Policy Research Center.

"Companies with expertise will deliver better services for residents and stimulate competition," Fu said, adding that opening these sectors to private players will enhance market efficiency.

Yet despite repeated calls over the years for a level playing field and government policies to encourage outsourcing of services, some private companies said their chances of clinching deals with local governments remain slim.

"Oftentimes, private firms have been discriminated against in bidding for these projects, even though authorities said we were granted equal status in market access," said an executive from a private company that builds rail for subway systems.

The executive told Xinhua that a truly merit-based evaluation should be enforced when governments consider candidates for investing in and operating utility projects.

In response to such concerns, the Beijing Municipal Commission of Development and Reform said in late July that private and state companies will enjoy equal status in land, prices, investment returns and infrastructure support.

The commission also said it will work with other regulatory organs to formulate standards and rules governing market eligibility, service quality and oversight.

The Beijing municipal government also vowed to adhere to market-based mechanisms in running infrastructure and utility projects in the future.

"A level playing field is crucial for the recovery in growth and economic restructuring," said Cai Hongbin, dean of Peking University's Guanghua School of Management.

"In addition to helping cash-strapped governments fund much-needed infrastructure projects, private companies also have an edge in technology and are efficient in delivering services," Cai said.

Chen Yuyu, another professor at the Guanghua School of Management, said that the upgrading of the Chinese economy requires governments to redefine their roles in market-based reforms.

"The role of a government should be mobilizing market players to enhance public services," Chen said. "Governments should be reformed to facilitate market activities and provide sufficient oversight."