Private Capital Next Step: How Does "New 36" Fail To Meet "Glass Door"

In May 13th, the State Council issued a number of opinions on encouraging and guiding the healthy development of private investment, which is known as the new 36 item of the non-public sector of the economy.

Compared with the "36 old ones", the "new 36" shows more executable and operable characteristics, and has even refined to two level subjects, including pportation, telecommunications, energy, infrastructure, municipal utilities, defense science and technology industries and 6 major areas 16 aspects.

"The message conveyed by this new 36 item is to further encourage and support the development of the non-public economy. This time, the key is market access, which means equal treatment and equal treatment."

Cheng Si Wei, former vice chairman of the Standing Committee of the NPC, said.

Although many analysts like Cheng Siwei think that the new 36 will be an important turning point for private capital, but others, such as Ouyang Junshan, a researcher of the national (private) Economic Research Association, are worried about whether private capital can really enter certain fields.

"The new 36" is likely to be like the old 36 "5 years ago", which is not worth the lip service, but also finally flows into the document.

It is very simple that the strength of the fundamentals is insufficient. "

Ouyang told China News Weekly in Junshan that "unless state capital can exit in a timely manner or the non economic factors intervene in the market less", private capital will really usher in hope.

An encounter is inevitable.

For the experienced private capital trader, this capital war is hard to fight, and the shadow of "glass door" and "spring door" lingers.

In Zhejiang, trillions of private capital (only about 600 billion yuan in the hands of the Wenzhou people) have been rushing eastward to the West for many years, winning the fruits of victory in different locations and different fields.

In the past, private capital had tried to participate in railways, coal, oil, telecommunications and other industries, but it was very uneven all the way.

Especially in last year's "national advance and retreat", many private capital felt cold.

Now, the horn of the non-public economy is blowing again. What's the next step for Zhejiang's public funding predators?

How does "new 36" no longer encounter "glass doors"?

On the morning of May 20th, in a hotel on Jinbao Street in Beijing, Chen Yongjie, vice president of the National People's Economic Research Association and director of the National Federation of industry and commerce research, was attending the inauguration ceremony of the family heritage and Education Committee of private enterprises. But the journalists attending the meeting were more willing to talk with him about the topic of "new 36 articles".

Over the years, as the main contributor to the blue book of China's private economic development report, Chen Yongjie has studied the development of private enterprises and private capital.

In the process of soliciting opinions from the 36 new articles, Chen Yongjie, the National Federation of industry and commerce, has put forward some policy proposals to promote the access of private investment industries and to break the monopoly.

In an interview with China News Weekly, Chen Yongjie said he was cautious and optimistic about the trend of private capital in the coming period.

On the day before May 19th, at a forum on "new 36" held in the auditorium of the central United Front Work Department, some private entrepreneurs and capital manipulator of the participants appeared to be fiercer than Chen Yongjie.

Fu Jun, chairman of the board of new Hualian Group Limited, was unhappy at this meeting.

He said that his company had wanted to do land consolidation first level development, but was told by some cities in the provinces that non-state capital should not be involved.

After that, he tried to make a breakthrough in the field of microfinance, and encountered similar provisions.

Finally, when their company plans to invest in oil and gas development projects, bad luck is coming again.

Fu Jun's experience is clearly not a case.

His remarks were immediately endorsed by other private entrepreneurs attending the meeting.

Many entrepreneurs complain that in the strategic emerging industries, such as wind power and solar power, which have been dominated by private investment, there has also been rapid entry of state assets and thus squeezing out private investment.

Those who have long been in the line of capital can not forget the shadow of the "glass door" and "spring door" after the introduction of the "36 old ones". They hope that the implementation of the new 36 rules can be promulgated soon, so that they can really feel relieved of their investments and fully compete with state-owned assets.

Huang Mengfu, vice chairman of the CPPCC National Committee and chairman of the National Federation of industry and commerce, said that the State Council should have a department and a leader to take the lead in formulating the implementation rules for the new 36 items, and the SASAC should introduce a policy opinion on releasing monopoly industries and attracting private investment.

The proposal was approved by Wang Xiaotao, director of the investment division of the national development and Reform Commission.

Wang Xiaotao replied that the rules will be issued soon. The work will be completed by the national development and Reform Commission, and the recommendations of enterprises from all over the region will be gathered to ensure that the provisions of the rules can really promote the development of private capital.

Zhou Dewen, deputy director of the Central Committee for economic development and chairman of the Wenzhou Association of small and medium enterprises, also told China News Weekly that the past bad experience has made many bosses of Zhejiang private enterprises and their hands holding money to be timid. "First, mineral resources based investment can not be done, and encourage investment like coal mines can be arbitrarily deprived of it. The investment in gold mines and the oil fields in Inner Mongolia and Xinjiang are the same. If the state wants to withdraw, it can be recovered at any time, and then everyone will dare to invest.

Second, real estate, including infrastructure, can not be invested in this area. "

Behind these speeches, there is a reflection from the results of the questionnaire survey conducted by the National Federation of industry and commerce. When answering these questionnaires, the bosses of private enterprises holding heavy capital are standing on the other side of the "4 trillion" side.

Private capital was thus squeezed out.

This is what Fu Jun did not want to see.

They said, hopefully, the new 36 can end this situation in the days to come.

Wang Yusuo, chairman of the board of directors of the new Olympic group, is directly concerned with the new deal of public funding.

Chen Yongjie believes that the implementation rules to be implemented are crucial and must be finalized under the full game of all parties.

Zhuang Congsheng, vice chairman of the China Federation of Commerce and industry, told the China News Weekly that private capital has been paid much attention in recent years. In March this year, Hu Jintao, general secretary of the CPC Central Committee, mentioned that he hoped that private enterprises could do more work, believing that the new 36 would not let private capital see the shadow.

Monopoly remains strong

If you want to relax, "it's still far away."

At the beginning of the new 36 articles, Li Houlin, founder and chairman of Hengxin diamond organization, sent a brief message on his micro-blog.

The news soon drew commentators.

Many bloggers congratulated him, saying that this is indeed a good news. Li Houlin can play his own spring story, "can invest in oil, and it will not be as dangerous as coal mines".

Li Houlin did not respond to this.

Other netizens expressed different views. They said, "it's still far away."

Although there is no wave of "national retreat" in the coal field, the seemingly calm Chinese oil market structure is still solid.

In June 29, 2005, China's first private oil joint company, known as "China's fourth largest oil company", was founded in Beijing.

Unfortunately, due to the delay in holding four major business qualification documents, the company can not carry out related businesses.

The NDRC also asked PetroChina and Sinopec to pfer the market space, but the two big tycoons were not allowed. Finally, the "long oil company" had nothing to do with it.

Similarly, in the field of Railways in monopolistic industries, the Ministry of Railways promulgated the implementation opinions on encouraging and guiding the participation of non-public sectors in railway construction and operation since July 2005. It clearly stated that it is necessary to open up social capital in railway construction, railway passenger and freight pport and other fields in accordance with the principle of "equal access and fair treatment".

A year later, the Ministry of Railways jointly issued the notice on continuing to open the railway construction market, and continued to release the development signals in the "design, construction and supervision business scope of the railway construction market".

In 2007, private capital began to participate in investment and construction of railways.

In those days, since the founding of new China, the first railway project with public participation and construction in Zhejiang was officially opened to traffic.

According to the statistics of the Ministry of railways, as of the end of 2008, there were 102 joint venture railway companies nationwide, and the newly built joint-venture railway has a mileage of 30 thousand km, with an investment scale of 2 trillion yuan.

But the fact is that these joint-venture railways account for a small proportion of private capital.

For example, the Quzhou Changzhou Railway Co., Ltd., a private enterprise, Changshan Cement Co., Ltd. accounted for 32.5% of the shares.

The other two shareholders are the Changshan municipal government and the Ministry of railways. They both add up to nearly 70% shares and are in absolute control.

Some analysts believe that a fundamental reason is that the railway is a unified management of the Ministry of railways, and private enterprises can only take up a small share of it. No matter how big the capitalists are, they can not get the right to operate, and "the Ministry of Railways will not give management rights".

In particular, income liquidation rules closely related to investment returns of private railways can only be formulated exclusively by the Ministry of railways.

Many large private enterprises have come out again. "If the railway realizes independent accounting of exclusive line, it can attract private investment."

In August 2006, a change of ownership was made in Quzhou Changzhou Railway.

In 2007, Guangyu group, a private shareholder, withdrew completely.

Zhang Hanya, vice president of China Investment Association, believes that in China's monopoly industries, the proportion of private capital entering does not exceed 20%.

In the more than 80 industries of the whole society, there are 72 kinds of permitted state capital to enter, 62 are allowed to enter foreign capital, and only 41 are allowed to enter private capital.

In an interview with the media, Hu Jun, deputy director of the Guangdong Productivity Promotion Center, said publicly that "private capital has fled in oil, telecommunications and other fields" because it has been over monopolized.

Ouyang Junshan, a researcher at the China private (private) Economic Research Association, said frankly that the forces and factors that are not conducive to the "new 36" now can be said to be very large.

One of them is "interest groups obstruct, intentionally or unintentionally boycotting the Zhongnanhai order".

Fight for finance?

"The enemy and our forces are very different. It is not a way to fight against death. We must adopt mobile warfare, sparrow warfare, and flexible fighting."

The classic lines in this anti Japanese war movie and TV play have become the tactics approved by private capital at the moment.

More private capital find another way out.

In the "new 36 item" promulgated in May 13th, "supporting private capital to participate in the capital increase and share expansion of commercial banks in the form of equity participation, and participate in the restructuring of rural credit cooperatives and urban credit cooperatives.

We should encourage private capital to initiate or participate in the establishment of financial institutions such as village banks, loan companies, rural mutual cooperatives, and so on, so as to relax the restrictions on the minimum proportion of capital contributions to corporate banks in rural banks or community banks.

In May 16th, at the summit of private capital development in China (Wenzhou), Chen Gongmeng, President of Wenzhou Venture Capital Research Institute, said that the latest trend of private capital in Wenzhou was entering into financial equity investment.

According to statistics released by Wenzhou Statistical Bureau in April, the total trading volume of the city's securities reached 259 billion 843 million yuan in the first quarter, an increase of 74 billion 429 million yuan over the same period last year, an increase of 40.1% over the same period last year.

Wenzhou has become one of the fastest growing areas of private capital in China.

According to the data released by Zhejiang daily, Wenzhou has invested less than 20 billion yuan in various forms of equity investment in the future, and it may increase year by year.

However, the Wenzhou Venture Capital Research Institute found that although Wenzhou has invested a lot of money in the equity investment market, there are not many teams that really operate properly.

"There are many difficulties to turn Wenzhou's hundreds of billions of private capital into equity investment, but these difficulties can not be overcome."

Zhou Dewen, President of Wenzhou Association of small and medium enterprises, said, "there are no less than 100 enterprises in Wenzhou, but there are no more than 3 enterprises that have core competitiveness."

If many equity investment institutions are really standardized and can bring stable and substantial profits to Wenzhou capital, it is inevitable that a large number of Wenzhou private capital will flow into the equity investment market.

One good news is that in February of this year, the Wenzhou municipal government led the establishment of Wenzhou Venture Capital Research Institute, which will provide intellectual support for Wenzhou's private capital in the field of equity investment.

This is also a specific measure for Wenzhou to broaden the new channels for private investment development.

A widely reported case is that in June, Wenzhou people will bring 5 billion of their funds to Taiwan to discuss the participation of Taiwan bank.

In Wenzhou, investors often compete for a small number of village banks and small loan companies.

"In recent years, private capital in Wenzhou has been trying to develop into the financial industry, but due to some policy constraints, the effect is not very good.

If we can successfully join the Bank of Taiwan and enter the mainland financial market, it will be a good try. "

Ma Jinlong, a well-known local economist in Wenzhou, said.

The 22 private capital bosses who participated in the project eventually hoped that they would be able to make a difference in the local village bank and go to Taiwan.

Guo Tianyong, a professor at the school of finance, Central University of Finance and Economics, said: "encouraging private capital to initiate and participate in the establishment of village banks has also opened a way for small loan companies to pform into village banks."