 |
|
| China's Annual Economic Review: Institutional innovation drives China's economy |
| CCTV.COM 2002-12-24 13:12:19 |
|
Year 2002 has been a year of change for businessmen both in China and overseas. Having examined the achievements China has accomplished in foreign trade and investment in its first year after WTO entry, in the second part of our annual economic review 2002, we will explore a somewhat less visible theme, institutional innovation, which has unleashed more productivity and injected new vitality into the robust economy.
At the 16th National Congress of the Communist Party of China in November, President Jiang Zemin clearly set out the goal for China's economic development: In the first 20 years of this century, China is to realize the establishment of a well－off society in an all－round manner and quadruple the year 2000's Gross Domestic Product by the year 2020. The messages conveyed at the Congress has unleashed a new wave of enthusiasm among Chinese and overseas businessmen.
“The message President Jiang Zemin gave to the Party Congress is definitely giving us all the confidence we need for our future business in China,” said Hakan Rusch, senior VP of Ericsson, China.
Audie Wong, president of Amway, China, said, “I'm sure if China pursues this track, it will be productive, and able to build a well－off society in the time frame President Jiang mentioned in his speech.”
Also in November, following the release of provisions for overseas partners to invest in listed companies, China published new rules allowing overseas business people to invest in unlisted State－owned companies, marking another leap forward in the opening of the country's previously largely closed corporate world to overseas investors.
The 16th National Party Congress has also triggered further domestic institutional changes on the business landscape. For the first time, private businessmen are participating the Party Congress as delegates. This unprecedented endorsement of the private sector has been widely hailed as a reflection of an increasingly pro－business slant in the Chinese Communist Party.
Qiu Jibao, owner of Feiyue Group, whose annual output exceeds 100 million US dollars, is excited about being part of the change.
"I am confident corporations like ours represent the pioneering force of the nation. We share the country's unemployment problems, enrich local people's lives, and exert international influence. I don't think my joining the CPC will affect the party's pioneering role,” said Qiu.
Qiu is one of around 2 million private bosses in China today. In many parts of the country, the private sector has come to occupy more than 80％ of the economy. By creating a "level playing field" for both state－owned and private enterprises and placing them on a more equal competitive footing, （Non－state firms would be given the same level of access to bank loans and will have access to many previously forbidden areas such as aviation, insurance and infrastructures） China's private sector has enjoyed robust growth.
Over the past decade, private firms in China have exploded in number from 90,000 to more than 2 million, while the number of State－owned enterprises more than halved from 102,300 in 1989 to 46,800 last year.
Nonetheless, state industry is still expected to maintain an important role in a highly reformed state. The past year has witnessed the smashing of the state monopoly in some industries.
In May, the monopoly of the world's fastest growing telecom market was broken up, and the former China Telecom was split into two competing companies: China Telecom and China Netcom operating in the north and south of the country. This marks a significant start for the government to break the monopoly to introduce competition into the sector.
“There will be competition for sure. And the geographic divide will not lead to two monopolies in the south and north, because we can do business in each other's areas. The new China Telecom has already made steps in our territory and our company will also carry out business in the south,” said Xi Guohua, general manager of China Netcom.
Only six months later, the much expected reshuffle in China's airline industry took place. The existing airline companies were regrouped into three giant holding companies. The industry's service and supply enterprises were also reorganized. The Civil Aviation Administration of China （CAAC）, has since ceased to be responsible for the management and profits of the companies.
Yang Yuanyuan, director of Civil Aviation Administration of China, said,“Problems have appeared in China's civil aviation in recent years. It needs more reform and structural readjustment, including a separation of management from government. This will meet global challenges better.”
Mergers or splits, acquisition or any other form of structural change, the painstaking process of improving China's economic mechanism may last for years, but the fruits have already been seen. Although the number has been halved, the combined profits of China's SOEs have gone up three and a half times. A constantly improving institutional structure mixed with timely catalysts just might be the recipe for China's economic feast.
|
|
Editor: Xiao Wei CCTV.com
|
|
|
|
|
|
|
