Sunday, June 24, 2012

A Radical Change Of Heart In China On Private Capital

In a stunning series of announcements last week, Beijing opened the doors to private capital. In the process, officials signaled a reversal of a half decade of anti-reform sentiment.
On Saturday, for instance, the China Banking Regulatory Commission announced private capital will have the same entry standards as state capital when it comes to the country’s banks. Specifically, private companies will be able to buy into banks through private stock placements, new share subscriptions, equity transfers, and mergers and acquisitions. Moreover, the government will liberalize investment into the rural banks and as well as the trust, financial leasing, and auto financing sectors.

And on the day before, Beijing gave the “all-clear” for the break up of state monopolies. The State-Owned Assets Supervision and Administration Commission issued guidelines that, among other things, permit private investors to contribute cash or assets like intellectual property to state enterprises in return for equity and discourage these enterprises from placing additional restrictions on private parties when the enterprises sell their stakes in listed companies. As SASAC noted, “The guideline reflects equal treatment of various kinds of investors and it helps ensure fairness in economic development.”

Click here to see how China is changing


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