Private Enterprises Still Face Grave Challenges After Crisis

At the ongoing annual meeting of China's political advisory group, the prospects of small- and medium-sized private enterprises have gained much attention as they were the group most vulnerable to the financial turmoil.

Although the impacts of the economic downturn in China have gradually cleared up, long-existing problems that face these enterprises are still containing their development.

Xu Weiyi has more.

Reporter: Wang Yongzheng is a private entrepreneur and deputy chairman of the chamber of commerce in Tianjin. He says a large number of private enterprises collapsed as a result of a sharp decline in orders after the financial crisis broke out in the other side of the world.

He says enterprises that have survived the crisis are becoming more resilient.

"We learned some lessons during last year's crisis, and by adjusting ourselves, I think we will be in a better position this year."

Though prospects are brighter, most private enterprises are still lacking access to finance.

To support the development of small- and medium-sized enterprises, or SMEs, China's top economic planner, the National Development and Reform Commission, is working on a new package of policies and measures to encourage private investment.

Mao Yunshi, a scholar with Sun Yat-Sen University in Guangdong Province, suggests reforms in the financial system to expand financing channels for these enterprises.

He cites the example of micro-credit companies, which have been set up over the past year in parts of the country.

These micro-credit lenders are welcomed by private entrepreneurs like Wang Yongzheng as a means of quick lending.

"They are of great help, because if they don't take the risks for giving loans to SMEs, they cannot compete with state-owned banks. Only these private lenders could share the risks with us and help us get through the difficulties."

Mao Yunshi, the scholar from Sun Yat-Sen University, says the financial crisis has served as a catalyst for the government to approve private lending.

"These micro-credit lenders are still at the primary stage of development, so at present they only play a limited role. Their business is also restricted. There should be further policies to allow them to take deposit, so that they could accumulate more capital."

Besides financing difficulties, both visible and invisible barriers to private investment in sectors like telecommunication and steelmaking are also containing their development.

Zhang Xiaoji, a researcher with the Development Research Center of the State Council, says this is known as the "glass door" phenomenon.

"We should consider how to remove the "glass door" that is blocking private investment from entering these sectors. All the enterprises should compete at an equal footing."

Private enterprises may feel cheered as the government is also considering new measures to allow them to invest in more sectors that were once dominated by state-owned enterprises by the end of this year.

Xu Weiyi, CRI news.