With the private economy enjoying rapid growth in Shanghai over the past two years, china.org.cn staff reporter Zhang Yan interviewed Ren Wenyan, chairwoman of the Shanghai Chamber of Commerce, on the role of private and individually-owned businesses in Shanghai's overall development. Ren is also a member of the Chinese People's Political Consultative Conference, vice chairwoman of the Standing Committee of the Shanghai Municipal People's Congress, and chairwoman of the Shanghai City Federation of Industry and Commerce.

Private enterprises in Shanghai numbered 176,384 -- up 27.6 percent over the same period of the previous year, according to Ren Wenyan, who added that these businesses employed 1.98 million people -- including 367,546 who had invested money in the venture -- 31.1 percent more than the previous year. Meanwhile, individually-owned business numbered 221,118, up 10.1 percent, with employees numbering 272,057, up 10.9 percent.

Ren Wenyan said the development of private economy in Shanghai has the following four characteristics:

First, private enterprises have a large operational scale and a clear promotional role in the city's overall economic development. In 2001, registered capital of private enterprises totaled 186.21 billion yuan (US$22.52 billion) up 43.1 percent over the previous year, and averaging 1.06 million yuan (US$127,738) per enterprise up 22.4 percent. Ninety-eight enterprises each had registered capital exceeding 100 million yuan (US$12,096,433). Also, by the end of 2001, registered funds from individually-owned industrial and commercial businesses had reached 2.3 billion yuan (US$278.22 million) up 13.3 percent, and averaging 10,400 yuan (US$1,258.03) per enterprise up 3 percent. During 2001, the city's private and individual economy realized 274.45 billion yuan (US$33.2 billion) in production and marketing volume, an increase of 40.6 percent, and 41.6 billion yuan (US$5.03 billion) in added value, accounting for 8.4 percent of the city's total GDP. In 2001, the private sector paid 10.82 billion yuan (US$1.31 billion) in taxes, accounting for 8.3 percent of the city's revenue.

Second, Shanghai's private economy covers various industries. Most of such businesses engage in the tertiary sector, especially in high-tech and service industries. By the end of 2001, private enterprises engaged in the first industry numbered 466, accounting for 3 percent of the total; those in the second industry 51,339 or 29.1 percent; those in the tertiary industry 124,579 or 70.6 percent. More private enterprises are dealing with technology-intensive businesses. By the end of 2001, the number of these enterprises had reached 11,714, of which 120 were designated as high-tech enterprises of the city. Information and biochemical industries enjoyed a particularly quick development. In the Zhangjiang High-tech Park Area, among the registered 1,449 information technology, biochemical enterprises, some 671 were private enterprises, accounting for 46.3 percent of the total. The number of enterprises engaged in such modern businesses as information consulting and intermediary services had reached 7,569, up 50 percent over the same period of the previous year. Other private service businesses stepped into the field of market planning, insurance agencies and logistics.

Third, the number of entrepreneurs establishing enterprises in Shanghai has continuously increased. Some private enterprises from other provinces have moved their headquarters to Shanghai appreciating to take advantage of its favorable conditions of information, qualified personnel, science and technology, funds and operational environment. By the end of 2001, the number of private enterprises from other provinces made up 28.7 percent of the total in Shanghai. Many companies with assets exceeding 100 million yuan (US$12.1 million) each, including the Hope Group and the People's Electric Appliance Group, have branched out into Shanghai. Among the city's top 100 private enterprises in 2000, five enterprises from other province ranked among the top 10.

Fourth, the development of private enterprises has greatly stimulated the city's re-employment project. So far, employees in private and individual industries in the city have numbered 2.25 million, up 28.3 percent over the same period of last year, equaling one-third of the number of employees working in the city's state-owned enterprises. During the movement called "adding 100,000 jobs in Shanghai in 2001," private and individual enterprises played an important role by absorbing 141,000 urban laborers during the year.

Talking about the current situation of private economic development and its progress, Ren Wenyan also mentioned several issues that should be attended to.

The first is related to the business environment for private enterprises. Ren said that China's private economy gradually has emerged in the process of developing a market economy and is characterized by its adaptability to market demands. However, this does not mean that the central government gives it an entirely free hand. The government must create a fair and favorable operational environment for the development of the private economy.

The second issue concerns the difficulty that private enterprises have in getting bank loans. The Shanghai municipal financial bureau is now cooperating with the China National Investment and Guaranty Co. Ltd. (CNIGC) to provide loans for these enterprises. If companies have problems with a credit rating when applying for bank loans, the CNIGC can help by providing a guarantee. Under normal circumstances, projects costing less than 3 million yuan (US$ 362,893) will be mainly under the direction of township governments themselves and the CNIGC will provide them with a guarantee; projects costing 3-5 million yuan (US$362,893-604,822) will be mainly the concern of CNIGC branch companies, and township governments will invite both banks and CNIGC branch companies to carry out on-the-spot examinations and decide together whether to provide loans; projects costing more than 5 million yuan (US$604,822) must be reported to and overseen by the CNIGC. Currently, the project has extended 5-billion-yuan (US$604.82 million) credit to small and medium-sized enterprises, playing an important role in the development of private economy in Shanghai.

Third, the Shanghai municipal government treats economies of different ownership on the same footing. It supports all those enterprises adhering to state laws, regulations and policies. Instead of making lots of promises or requests, the city government creates a favorable competitive environment for enterprises in accordance with market mechanism and operational scale of enterprises.

Finally, Ren said she anticipated an even faster development of private economy in the service sector, and the intermediary and logistic industries in particular in coming years. With more and more well-educated personnel joining private enterprises, many private entrepreneurs, after the completion of capitals accumulations, move into the high-tech field. Besides, some industries -- finance, insurance and telecommunications where non-governmental capitals used to be forbidden -- will open to private enterprises following the opening to foreign capitals. Private enterprises have formed a development trend suitable to the over-all industrial arrangement of Shanghai and the goals of internationalized metropolises.

(By Zhang Yan, china.org.cn staff reporter, translated by Li Jingrong March 18, 2002)