Private business becomes impetus to Chinese economy - ADB

04/10/2002

Private business has become an important impetus to economic development in China, according to the Asian Development Bank (ADB).

According to official statistics, private business in China accounts for 13 percent of China's gross domestic product (GDP). ADB says that taking holding companies, foreign-funded companies, township-owned business and private business in rural areas into account, private business accounted for 60 per cent of the country's GDP.

ADB said over half of China's 200 million employees in urban areas open up their own business or work for private businesses, as private business is playing an ever more important role in the service and high-tech industries. There are 8 million small and medium sized private companies in China, as many more State-owned enterprises are privatized.

ADB estimated China will have to create eight million to 10 million job opportunities annually for extra human resources in urban areas and to help five million unemployed. In 2001, the unemployment rate was 3.6 per cent, which, in effect, would exceed seven per cent. Vital private business is expected to boost the local economy and create more job opportunities in China.

The Chinese government has adopted some concrete measures to boost private business in terms of legislation, administration, foreign trade and financing services.

China still needs to take further steps to cultivate a sound environment for private business operations. In the long term, China's entry into the World Trade Organization (WTO) would help build a legal system for private business, said Tang Min, a senior economist with ADB.