CHINA IN HARDEST PRIVATE-SECTOR PUSH IN DECADE
Pete Sweeney and Langi Chiang
Reuters, May 23, 2012
SHANGHAI/BEIJING (Reuters) - China signaled on Wednesday it wanted to boost private investment in its energy sector as Beijing makes its most determined push since joining the World Trade Organisation to reduce the role of the state sector in the economy.
Many analysts say China must allow more private investment if it is to unlock new sources of economic growth, which the World Bank said would slow in 2012 to its weakest pace in 13 years.
"Downward economic pressure is increasing," Premier Wen Jiabao said at a regular cabinet meeting, where he underscored previous comments that China would increase measures to support growth. His remarks were reported on the government's website.
Beijing intends to fast-track infrastructure investment to combat the slowdown, state media reported this week.
In the latest measures, the government will publish detailed guidelines aimed at encouraging private investment across industries, with special focus on heavily state-controlled electricity, oil and natural gas sectors, the official Xinhua news agency said.
"It's a fantastic aspiration, but it's very complicated as it involves a lot of things," said Stephen Green, chief China economist at Standard Chartered Bank in Hong Kong.
"It's impossible to quantify until we see details, but it could probably take years to see any impact," he said.
The government has already said it would allow private investment in the vast railway sector, which is struggling with mounting debts and a corruption scandal while attempting to resolve infrastructure bottlenecks.
Last month, sources told Reuters that China's reformers sense an opportunity to push through a series of changes before President Hu Jintao and Premier Wen step down early next year.
That view could also be partly behind the latest steps to allow more private involvement in state-controlled areas.
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