As China's growth moderated in the first quarter of 2014, the government has moved to tap the potential of investment from enterprises, instead of rolling out a massive stimulus plan.
The country will grant companies greater autonomy in investment and allow private capital to fund some infrastructure and energy projects that were previously dominated by the government and state-owned enterprises, said a statement after a State Council executive meeting on Wednesday presided over by Premier Li Keqiang.
LESS INVESTMENT BY GOVERNMENT
The country will reduce the scope of administrative approvals for companies' investment projects to allow more autonomy to companies, the statement said.
Investment projects will only need to be registered instead of approved if they can be effectively regulated through economic measures and legal means in sectors with sufficient competition.
Allowing companies autonomy in investment is a necessity in balancing the roles of the government and the market, as well as an important move in utilizing the pivotal role of investment, boosting restructuring through reforms and maintaining the stable growth of the economy, according to the statement.
For projects that still need to go through administrative approvals, responsibilities of the central government and local governments will be clarified. Approval procedures will be standardized and simplified to raise efficiency.
Li said at the meeting that great potential still exists for the country's investment, as infrastructure in many fields across the country is outdated.
However, China should guide private capital into more areas, optimize investment structure and further promote the diversification of investing entities, the premier said.
"The government should not serve as the dominant force in boosting investment, but should put more energy into public services and market supervision," Li told the meeting.
ENCOURAGING PRIVATE CAPITAL
In a first batch of sectors opened to private capital, the government will roll out 80 pilot projects in fields including transportation infrastructure, new-generation information infrastructure, major clean energy projects, oil and gas pipelines, coal, chemical and petrochemical industries.
The projects chosen should be in line with requirements of related government plans and conducive to economic restructuring and upgrading.
They will be open to public bidding, and the government encourages the participation of private capital in the construction and operations of those projects through joint ventures, sole proprietorship and franchise.
In the future, China is going to further open up the fields of oil and gas prospecting, public utilities, water conservancy and airport projects, according to the statement.
The country will also streamline administration and delegate power to lower levels to build an equitable environment for competition and keep market order.
REFORM INSTEAD OF STIMULUS
The country's economy slowed to a six-quarter low of 7.4 percent in the first quarter of this year, down from an annual growth of 7.7 percent last year. The government targets a growth of around 7.5 percent for 2014.
The latest emphasis on corporate investment and private capital reaffirmed the government's will to avoid the kind of massive stimulus plan adopted in 2008 in the height of the global financial crisis, which led to overcapacity, excessive liquidity and runaway property prices.
Earlier this month, Li said at a forum in Hainan Province that China will not resort to strong short-term stimulus policies just because of temporary economic fluctuations, but rather pay more attention to sound development in the medium and long run.
China will seek growth impetus from deepening reforms, adjusting economic structure and improving people's livelihood, the premier said.
Li Pumin, secretary-general of the National Development and Reform Commission, also said that China's macroeconomic policies will not change as long as the economic growth and employment do not break the bottom line and inflation growth does not exceed the upper limit.
"The nation's efforts to deepen comprehensive reforms will inject new vitality to economic growth," he said.