China Private Economy Development Forum Held

Peking University, Beijing, Dec. 31^st 2008: China Private Economy Development Forum was held in the Great Hall of the People on December 26^th, jointly organized by China Federation of Industry and Commerce and PekingUniversity, and undertaken by Private Economy Research Institute of Peking University. Member of the Standing Committee of the Political Bureau of the CPC Central Committee and chairman of the CPPCC National Committee Jia Qinglin delivered a congratulatory letter.

Jia Qinglin said in his congratulatory letter that in past 30 years, China's non-public economy has developed so vigorously that has become an important component of China's economic development, and has made a great contribution to China s economic development, spontaneous innovation, livelihood and employment improvement, as well as the establishment and improvement of the socialist market economy.

In his congratulatory letter, Jia pointed out that China's reform and development has been standing at a new historical starting point, where there are unprecedented opportunities and challenges. We must firmly grasp the central task of economic development and concentrate on our development, to promote rapid development of our economy and society.

Jia also emphasized that party committees and governments at all levels should conscientiously implement the principles and policies about encouraging, supporting and guiding non-public economic development in order to help non-public enterprises to solve problems and difficulties encountered in the development and create a good business environment for non-public section. Federations of Industry and Commerce at all levels should continue to carry forward fine tradition, adhere to correct political orientation, strengthen self-construction, and give full play to their functions, so as to better promote the healthy development of non-public economy. Non-public owners should respond to the call of the CPC Central Committee, unify their thinking, strengthen their confidence, response positively to challenges brought by the international financial crisis, combine continuous growth, structural adjustment and livelihood improvement together, concentrate on changing the way of development, accelerating the pace of structural adjustment and strive to tap the potential of domestic demand, and actively explore the domestic market, focus on the implementation of "going out" strategy, strive to open up international markets, strengthen independent innovation, enhance competitiveness of enterprises, take social responsibility and do everything possible to increase job opportunities, make a great contribution to the stable and rapid development of economy and social stability.

Vice-Chairman of the CPPCC National Committee, Chairman of the National Association of Industry and Commerce, Huang Mengfu made a presentation titled "Private Economy Is the Chief Benefactor and An Important Facilitator of Reform and Opening-up" at the forum. He said that concerning the future, we have every reason to believe that with the deepening of reform and opening up, private economy will further develop and grow. With the continuous development of the private economy, reform and open-up will further be expanded.

The Standing Committee of the CPPCC National Committee, deputy director of the Economic Commission and the president of private Economic Research Institute of Peking University, Li Yining, expressed his view on The Global Financial Crisis and China s Private Enterprises . Li believes that, relatively speaking, the impact of the world's financial crisis to China's financial industry is not severe; the negative impact are mainly on poor business operations, which makes greater amount of bad loans, but China's financial industry itself is not affected considerably. Li Yining believes that the problems we face now are actually influenced by 3 types of effects. First of all is the world financial crisis. Secondly, China s high speed development over these years has now come to the turning point. Thirdly, it is the exposal of the structural contradictions over the years. Li further pointed out that China's economy has three characteristics: Firstly, China is afraid of cold economy instead of hot Secondly, economy starts hard but brakes easily for the brakes are on the initiative of the government but starts are on the initiative of the business and people; thirdly, unemployment is more terrible than inflation.

Li suggested that in response to the current financial crisis, China's government should take measures from 5 aspects. First of all, the government should cut tax. Cutting tax is not only an important method to protect enterprises, but also can increase individual consumption. Administration can rest their assurance that the total tax after tax cut will not be reduced. In the long term, source of tax revenue after tax cuts expanded, tax increases, the total tax revenue will increase. Second, government should invest in infrastructure construction. On the one hand, it can ensure that the growth momentum; on the other hand, it can create more job opportunities. But we should ensure fair government procurement and no blind investment. Investment projects should go through strict screening and vetting. Third, we should ensure export. Once the occupation in the international market over the years was lost, it would be difficult to recover. Exchange rate adjustment should have periodical targets in order to stabilize the exchange rate expectations. Li stressed that the free convertibility of the RMB is not a goal. From the 1997 financial crisis in Thailand we can see that fully convertible currency is a double-edged sword. China should maintain the control of the current foreign exchange to make sure that hot money is difficult to get in and get off. Fourthly, the Government has to inject funds into high-quality companies. Li suggested that all banks should provide loans to small and medium enterprises and government inject funds into high-quality companies. States could consider stock appear in the form of preferred stock instead of common stock. On the one hand, if the injection is the common stock, it would be to increase the voting rights; the preferred stock takes dividends only, it does not affect the ownership structure; on the other hand, the bank should take off restrictions on investment loans, such as mutual investment among enterprises, the investment loan is not allowed and we should take off the restrictions, which is a good way to help high-quality companies to go through the difficulties in financial crisis. Fifth, we should pay more attention to people's livelihood. Only in this way can we eliminate people's worries and expand domestic demand.

Li also stressed that confidence is a crucial factor in overcoming the crisis. "Morale should be inspired instead of frustrated." Pressure has always been on the momentum and challenge has always been opportunity. China has the world's largest potential market in rural areas. We must develop agriculture resolutely. As long as the income of farmers is increased, the China s economy can be in the phase of benign circle.

The president of Lenovo Ltd., Liu Chuanzhi, chairman of Chongqing Lifan Group, Yin Mingshan, delivered their presentations on Transition of Private Enterprises and Improvement of Core Competitiveness and Entrepreneurs Personal Quality and Their Social Responsibility respectively in the forum.

Finally, deputy party secretary of Peking University Mr. Yang spoke on behalf of the organizers that 30 years of reform and opening up is also 30 years of development of PekingUniversity by leaps and bounds. With the full support of the state, PekingUniversity launched the plan to be a world-class university. Guided by this grand blueprint, PekingUniversity has made significant achievements in academic construction, personnel training, education program and scientific research. He mentioned that China's reform and opening-up is an unprecedented undertaking. To deal with new situation and new tasks and new requirements in the new era, we need to update our concept to catch up with the pace of time, especially private enterprises. Private enterprises are in the forefront of the world economy, only to follow the market rules, the market trend can we keep a position in the market. PekingUniversity is willing to strive to make a contribution to the further development of private economy and reform and opening-up policy.

More than 700 people from China's private economic sector and relevant departments attended the forum.

Edited by: Cai Ying

Translated by: Xiang Yunke

Source: PKUMarketEconomyAcademy