Oil well in Qaidam Basin, Qinghai Province, China

China to Open Up More Industries to Private Investors

Aug. 23, 2016
Non-state companies will be able invest in the oil  and gas sectors. 

"Political barriers" for private investment will be removed to offer a fair playing field and encourage non-state companies to take part in 165 projects outlined in the country’s 13th five-year plan, said Hu Zucai, vice chairman of China’s National Development and Reform Commission, the government’s top economic planning body.

The remarks follow a government plan announced on August 22 to lower corporate costs and raise profitability. China’s leaders are seeking to rev up faltering fixed-asset investment growth by the private sector to keep this year’s economic expansion target of at least 6.5% in sight.

"The government needs money, because they have to restructure a huge state sector," said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis SA in Hong Kong. "But it’s still not clear where they will give up control."

China will open sectors including oil and gas drilling to private capital to counter record-low investment growth by non-state firms.

For strategic sectors such as telecommunications, energy and nuclear power, Herrero said there might be some private investment, but not "deep involvement."

Hu reiterated the government’s pledge to ease burdens on companies and create a fair investment environment for private investors. "The most important thing is to grant maximum market access, and the State Council has made it clear it will roll out a negative list regarding market access," he said. A negative list would specify which areas are off limits, leaving all others theoretically open to private firms.

"We need to generate more channels for private investment to take part in major projects more swiftly and smoothly," Hu said. "There must be a clear and predictable investment environment for private investors."

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