Such private capital, prevented from aiding development before China adopted its opening-up policy in 1978, is set to play a pivotal role in boosting the national economy in 2003, says a noted Chinese economist who preferred to remain anonymous.

When the positive financial policy had been actively implemented, a huge amount of private capital would be available to stimulate domestic market demand, the expert said.

On February 10, the General Administration of Civil Aviation of China (CAAC) finally approved a bid by the Junyao Group, a well-known Chinese private company, to buy the Yichang Airport, 30 km away from the Three Gorges Project. It was regarded as a landmark event for China's special, monopolized and half-military aviation business.

Within the year, China's first private banks probably would gain approval to be set up, according to a source from the People's Bank of China, the country's central bank. The establishment application of these ten private banks had undergone seven assessments and final approval was just "a matter of time," he said.

Xu Dianqing, an economist known as an active advocate for China's private banking industry, said the final ratification of the first group of private banks would have a profound impact on China's financial market.

Official information showed that the discussion on how best to use private capital was "heated" at the just-finished local Chinese people's congresses and political consultative conferences.

The report of the 16th National Congress of the Communist Party of China required that the government lessen the limitations on market access for domestic private capital and create a fair and competitive environment for private enterprise in various fields like investment, taxation, the use of land and foreign trade.

Analysts said the report clarified and confirmed the current role of domestic private capital in the national economy, which would greatly promote private capital investment.

While reviewing the development of the national economy in 2002, Qiu Xiaohua, deputy director of China's National Bureau of Statistics (NBS), said the state-owned economy had contributed one-third to the overall development of the national economy while two-thirds came from the non-state-owned economy.

Private business had become a major non-state-owned economic power to boost the rapid and sustained development of the national economy, Qiu added.

NBS statistics showed that Chinese privately-owned financial assets exceeded 12 trillion yuan (US$1.45 trillion) by the end of 2001, and in the same period, state-owned assets totaled only 11 trillion yuan.

"That is to say, China's private assets have exceeded those of state-owned enterprises and institutions," Qiu said.

The Chinese government has acted positively to speed up the reform process and accelerate private capital investment.

Earlier this year, Wang Guangtao, China's minister of Construction, said this year China would completely open the national urban utility market to domestic and overseas investors.

Financial observers believe this means that industries directly related to the national public interests, like water supplies, electricity generation, sewage disposal and public transport, would all become accessible to private capital.

Yuan Yaohui, a CAAC official, recently said the CAAC was drafting a regulation to allow private capital into China's aviation sector. The regulation would be submitted to China's State Council for revision in March, he added.

It would be "more open and flexible" than the one specially issued to welcome foreign capital into the industry last year, Yuan revealed.

(People's Daily February 22, 2003)