China to spur private investment in strategic sectors

BEIJING: China's top planning agency has pledged to allow private firms to invest in the country's new strategic industries, signalling a policy shift to reduce the dominance of state-owned giants.

Under the new rules published by the National Development and Reform Commission (NDRC) on Monday, private firms will be allowed to invest in seven new strategic industries identified by the government, as long as they meet regulatory requirements.

"Private firms and private capital are an important force in cultivating and developing new strategic industries," the NDRC said in the new rules.

China plans to develop seven new strategic industries, including alternative energy, biotechnology and advanced equipment manufacturing, to boost the competitiveness of the world's second-biggest economy.

Local governments will be prevented from using barriers, including those on capital, investment, production capacity and land use, to restrict private investment, the NDRC said.

Private firms will enjoy the same treatment as state-owned firms in terms of accessing budgetary investment, venture capital and other public resources, it added.

Qualified private companies will be allowed to issue bonds and shares and given other forms of financial support, it said.

In addition, private firms will receive support when they set up global research and development centres through mergers or acquisitions, the agency added.

Beijing originally planned to invest up to $1.5 trillion over the next five years in the new sectors, but sources told Reuters that the authorities may scale back cutting-edge projects for industries suffering from problems such as corruption and overcapacity.

Private firms were squeezed in the course of Beijing's huge stimulus launched in 2008 to counter the global crisis, with bank loans and public funds lavished on state companies.

Copyright Reuters, 2011