(Bloomberg) -- China is taking a major step to open up sectors ranging from oil and gas to telecommunications and railways, easing market regulations and lowering financing costs for private companies.
The government will offer more tax breaks and broaden incentives to more firms, according to a government statement published by the official Xinhua News Agency, which didn’t specify the industries.
President Xi Jinping, who’s negotiating an agreement amid a trade war with the U.S., is seeking to increase China’s political clout and revive ancient trading routes under his “One Belt, One Road” initiative, spending heavily on infrastructure projects. The move will help the government tap a market where it has 27 million private companies, employing more than 340 million people and accounting for 60% of the economy.
New Silk Road Spreads China’s Money, and Influence: QuickTake
To help companies raise funds, it will also back the bond issuance of these companies and lower the threshold for new convertible bonds. It will also draw new investors by allowing funds held by asset management and insurance firms to invest in private equity funds to ease the struggles faced by some private companies.
With the economy growing at the slowest pace in three decades and warning signs flashing throughout the nation’s financial market, private firms are increasingly facing tougher access to capital.
The government is also lowering the financing costs further for smaller private companies and is seeking to set up financial institutions that provide services mainly to these firms. China will improve legal protection for private companies and the assets held by entrepreneurs.
To contact Bloomberg News staff for this story: Ocean Hou in Beijing at jhou88@bloomberg.net
To contact the editors responsible for this story: Sharon Chen at schen462@bloomberg.net, Linus Chua, Ian Fisher
©2019 Bloomberg L.P.