Discovering New Investment Vitality

Since the beginning of this year, China's economy has been operating overall steadily and making progress. With the joint efforts of all parties, the private economy has maintained a stable and positive development trend.

For a long time, private investment has been the "barometer" of the vitality of the private economy and has become an important part of expanding effective investment.

To further promote the development of private investment, the National Development and Reform Commission, in conjunction with the Ministry of Natural Resources, the Ministry of Ecology and Environment, and the Financial Regulatory Authority, issued a notice proposing the establishment of a mechanism to promote private investment funds and factor protection.

When interviewed by a reporter, a deputy researcher at the Institute of Economic System and Management of the National Development and Reform Commission said that establishing a mechanism to promote private investment funds and factor protection is a specific policy to optimize the private investment environment, which is conducive to promoting the stability and improvement of private investment.

Reform focus: Achiement of factor protection

"Whether private investment is active or not is directly related to the speed and quality of economic growth," said Ye Yindan, a researcher at the Bank of China Research Institute.

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In terms of financial support, the notice proposes that the Financial Regulatory Authority and the National Development and Reform Commission will study and formulate policies to support financing for private investment, guiding financial institutions to innovate financial products and services.

According to the requirements of the notice, support and encouragement will be given to private capital to activate its own assets through various means such as property rights transactions, mergers and acquisitions, non-performing asset acquisition and disposal, and asset securitization. Private enterprises are encouraged to use recovered funds for infrastructure to make up for shortcomings, new infrastructure, and key industrial chain supply chain projects.

In terms of financial institutions' innovation in financial products and services, specific implementation in the future may include increasing support for private investment to activate existing assets. For example, strengthening the whole process service of private investment project REITs declaration, issuance, and operation, and emphasizing equal treatment for enterprises of all types of ownership. "If the above details are implemented, it may form a virtuous cycle of investment."

In addition, regarding "factor protection," the notice clarifies: The National Development and Reform Commission will push key national private investment projects to the Ministry of Natural Resources and the Ministry of Ecology and Environment, and the two departments will provide special support for land and sea use and environmental protection assessment; at the same time, they will jointly guide private enterprises to fully utilize factor protection support policies, optimize investment decision-making management and factor approval services, and further improve the quality and efficiency of private investment project pre-work.A source informed the journalist: "It is anticipated that in the future, a joint approval mechanism will be established and perfected to serve the use of elements related to private investment. Existing approval procedures for land and sea use, environmental protection, and others will be sorted out and integrated. On the basis of meeting all requirements, efforts will be made to simplify the preliminary assessment work for private enterprise project investments, thereby improving the efficiency of private investment implementation."

She believes that the establishment of a mechanism for the safeguarding of funds and elements for private investment aims to provide all-round support and protection for private investment, thereby promoting stable growth of private investment, optimizing economic structure, and enhancing the momentum of economic development.

The journalist learned that as early as July 2023, 17 measures were proposed from four aspects: clarifying work objectives, focusing on key areas, improving safeguarding mechanisms, and creating a favorable environment.

Among them, in terms of improving safeguarding mechanisms, two specific measures were clearly proposed: "optimizing financial support for private investment projects" and "strengthening the safeguarding of elements for key private investment projects."

In the market's view, the two supporting measures introduced this time not only update the specific path of private investment reform but also once again emphasize the importance of the private economy.

Shi Ying told the journalist: "At present, focusing on key areas such as the funding and element safeguarding of private investment projects will effectively solve the problems of private investment being hesitant to invest, not knowing how to invest, and being unable to invest. The aim is to deepen, refine, and concretize current policies."

According to statistics from the National Development and Reform Commission, in the first half of this year, fixed asset investment grew by 3.9% year-on-year. Among them, manufacturing investment grew by 9.5%, and the proportion of private investment in the total investment rebounded to 51.9%.

At a press conference held by the State Council Information Office, Zhao Chenxin, Deputy Director of the National Development and Reform Commission, stated that efforts will be made to effectively mobilize the enthusiasm of private investment, improve mechanisms to stimulate the vitality of social capital investment and promote investment implementation, and promote the formation of a market-led effective investment endogenous growth mechanism.

Reform Path: Driving Private Investment

Experts interviewed believe that at the current stage, the activity level of private investment is somewhat insufficient and urgently needs to be improved.On August 16th, the fifth plenary session of the State Council made a clear statement: "Expanding investment should leverage the leading role of government investment and implement various policies to support private investment."

Liu Xingguo, a researcher at Hunan Automotive Engineering Vocational University and a special senior researcher at the China Enterprise Confederation, said in an interview with journalists: "The main factors affecting the growth rate of private investment are the lack of development opportunities, insufficient investment confidence, and inadequate guarantee of capital elements, among which the problem of insufficient guarantee of capital elements is particularly evident."

In Liu Xingguo's view, strengthening the supply of funds can significantly alleviate the pressure on enterprise development, help stimulate the vitality of investment development, and enhance the development momentum of enterprises.

Zhao Chenxin believes that making good use of the inter-ministerial joint meeting system to promote the development of the private economy and implementing a series of measures to promote private investment is essential to encourage private capital to dare to invest, be willing to invest, and be able to invest.

Zheng Shanjie, the director of the National Development and Reform Commission, stated during this year's two sessions when answering questions from reporters, that encouraging and supporting the expansion of private investment includes two aspects of work: helping private capital find projects and helping private investment projects find funds.

As an important component of the private economy, private investment accounts for more than half of the total social investment and is a benchmark for expanding effective investment and market expectations of investment information. How to stimulate the vitality and momentum of private investment in China?

In Shi Ying's view, it is more important to promote government investment to drive private investment. In recent years, the construction of projects such as ultra-long-term special treasury bonds, central budget investment, local government special bonds, and the 2023 government's additional issuance of treasury bonds has been accelerated, and the amplification effect of government investment has continued to be released.

"Continue to encourage and attract private investment to participate in major national projects and projects to fill gaps, key industrial chain and supply chain projects, and further play the amplification effect of government investment on private investment," Shi Ying believes.

"One deployment, nine implementations," only by solidly implementing various decisions and policy measures to promote private investment with a pragmatic style, and continuously mobilizing the enthusiasm of all parties' investment, can we better stabilize market expectations and enhance development momentum.

In order to better stimulate the vitality of private investment, Liu Xingguo suggests starting from three aspects: First, improve policy systems, increase the supply of systems that are beneficial to the development of private enterprises, and boost the confidence of private entrepreneurs in investment development; second, optimize the market environment, stimulate market demand, enhance corporate profitability, and improve the development expectations of entrepreneurs; third, effectively strengthen the guarantee of elements, help private enterprises solve the difficulties and problems faced in development, and eliminate unfavorable factors that hinder development.