The iron tree blossoms, the cockerel lays eggs, and the rope on a seventy two year old cradle suddenly snaps.
The above Song Dynasty poem refers to something extraordinary and difficult that happens suddenly.
Since the founding of new China, the country’s leadership has always supported the State-owned sector and worked hard to deliver a better life to its people.
In recent years, as the global economy has changed, raising myriad new challenges for China, the Chinese leadership has recommended new strategies for such new realities. The One Belt One Road (“OBOR”) program increases global connectivity and convergence of shared interests and delivers shared benefits in trade, investment, and many other areas. The program aims to promote economic sustainability not just for China, but for many nations and peoples around the world. The OBOR program has sparked massive State-Owned Enterprise (“SOE”) infrastructure investment in every continent, followed by private sector cooperation in virtually every industry.
OBOR and other programs have made international headlines. However a more significant event, with some of the most far-reaching implications, has gone relatively unnoticed and deserves closer attention.
On September 16, 2015, Xinhua and other news sources reported a story of great significance to Chinese private companies but also business and political cooperators around the world. State media reported the results of a September 15 meeting of the Chinese People’s Political Consultative Conference (“CPPCC”) which focused on how to “Promote Non-Public Enterprises (“NPE”) to ‘Go Out’”.
This is a recommendation that the government starts supporting private sector businesses if they internationalize. This recommendation has far reaching political and economic ramifications. It reflects a realization that the private sector has for years generated employment, economic growth and that it deserves to be supported along with the state-owned sector. For Chinese companies, this is a major milestone. We believe that in years to come, this story will be considered as significant as Deng Xiao-ping’s visit to the south in 1992.
The report went on to elaborate that the promotion of private sector company overseas investment would require:
- Streamlined procedures and sound financial, insurance and tax systems and mechanisms
- Acceleration of development of relevant consulting firms and intermediary agencies
- Speedy establishment of e-government systems and information sharing platforms
- Efforts by the Association of Industry and Commerce to build chambers of commerce supporting Non-Practice Entities (NPEs) in their overseas explorations
- Strengthened communication between relevant authorities (e.g. the Ministry of Commerce) and the Association of Industry and Commerce
- Enhanced services by Chinese embassies and consulates
- Efforts by overseas Chinese and Chinese communities
The announcement is a major guideline of the central government and is of great significance with support and coordination being pledged from key members of the CPPCC, Ministry of Commerce, the National Development and Reform Commission, Ministry of Foreign Affairs, Customs General Administration, the National Association of Industry and Commerce.
We are confident that this initiative will be welcomed by the private sector and be supported with the institutional support of government agencies in China and abroad.