From February this year, the All-China Federation of Industry and Commerce (AFIC) carried out a survey of private firms that have gained entry to the previously state-monopolized sectors of infrastructure construction and public utility operation.

 

The following is a summary report published on December 21 in China Business Times, a Beijing-based newspaper affiliated to the federation.

 

Over 170 firms in 23 provinces and municipalities responded, 59 of which had turnovers exceeding 100 million yuan (US$12 million). This in itself indicates that private firms have established a significant presence in the sector.

 

They were engaged mainly in urban gas supply, power and heating supply, power plants, urban infrastructure construction, and construction of high-level roads and bridges. Comparatively few of them were involved in tap water supply, urban sewage and garbage disposal, civil aviation, railway or telecommunications.

 

Although 89 of the firms surveyed didn’t give their investment volumes for 2003, those of the remaining 81 still totaled 12.8 billion yuan (about US$1.54 billion), while their total revenue was 7.4 billion yuan (about US$894 million).

 

Firms involved in gas supply, heating, power and bridge construction reported investments higher than revenues. However, tap water supply, sewage and garbage disposal and urban infrastructure construction firms reported the reverse, showing they had begun to reap profits in 2003.

 

About 60 percent of the firms said they wished to invest further in these sectors, and are confident about future development and gains. They also hoped that the AFIC can improve information flow between them and government, reaffirming the need for effective industrial organizations.

 

Central government has pushed to open up these sectors, but problems remain due to the lingering influence of the planned economy.

 

Issues like pricing mechanisms, market entry qualifications, operating rules and supervision measures still attract calls for more effective regulation and standardization. Current policies differ from region to region, maintaining local protectionism and bias against new and private firms.

 

In some sectors like power and gas supply, industrial chains are monopolized by state-owned firms, so private companies continue to be disadvantaged. They can also lack financing channels and have poor access to timely and accurate government information.

 

The loosening of market entry policies provides new opportunities for private firms, but there is still a lot of room for development in these sectors. Lower entry thresholds should lead to greater competition and efficiency, and ultimately to better quality services.

 

(China.org.cn by Tang Fuchun, December 26, 2004)