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Print Edition> Business
UPDATED: December 2, 2013 NO. 49 DECEMBER 5, 2013
Private Capital Into the Mix
China to merge public and private sectors to develop a mixed economy
By Lan Xinzhen

EXECUTION NEEDED: A technician from Jinhua Power Supply Co. of Zhejiang Province checks power transmission lines. China needs more detailed measures to carry out its policy for developing a mixed economy (WANG PING)

The idea of a mixed economy comprising of state, collective and private capital has gained much traction as China turns its attention to future development. The Decision on Major Issues Concerning Comprehensively Deepening Reforms released right after the Third Plenary Session of the 18th Central Committee of the Communist Party of China has decided that this economic model is to be the primary vehicle for economic reform.

Yang Weimin, Deputy Director of the Office of the Central Leading Group on Finance and Economic Affairs, said in the future, non-public investors, including private and foreign ones, will be able to enter all sectors except for those involving national security, and also purchase shares in or acquire, in accordance with market rules, state-owned enterprises (SOEs) in these sectors.

This has put forward new reform requirements to China's SOEs. Chu Xuping, head of the research center of the State-Owned Assets Supervision and Administration Commission, said by 2020 most SOEs will diversify their shareholdings and, except in some special sectors, most SOEs will develop into mixed-ownership enterprises.

An executive meeting of the State Council on September 6 decided that sectors with state monopolies, including finance, petroleum, power, railway, telecom, resource development and public utilities, will be the focus to develop a mixed economy.


Yang said the Chinese economic system is comprised of both a public economy of state and collective capital and non-public economy of private and foreign capital. Developing a mixed economy reflects the principle of "coexistence of multiple ownership."

According to Yang, developing a mixed economy is a way for China to make a breakthrough in economic reform. It focuses on boosting SOE reform and breaking monopolies by SOEs. During the process of SOE reform, diversifying SOE ownership will help improve corporate governance structures and establish modern corporate management systems in SOEs.

Before 1978, China adopted a state-owned economic system. After the policy of reform and opening up began, the private sector grew rapidly, and China stepped onto a road where the public economy played a dominant role and diversified ownership coexisted. Since the 1990s, China began to allow private and foreign investors to participate in reorganization of SOEs and promote the development of a mixed economy.

Under the present situation, to develop a mixed economy reflects the equal importance of public and non-public sectors. The Decision on Major Issues Concerning Comprehensively Deepening Reforms says that "both public and non-public sectors are an important basis of a market economy and important parts of China's economic and social development," raising the status of the non-public sector in the Chinese economic system.

In a mixed economy, public and non-public sectors will merge, so differentiation of ownership types will be increasingly vague.

Li Jin, deputy head of the China Enterprise Reform and Development Society, thinks that developing a mixed economy is very important to improve the system of property rights protection.

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