21 October 2016
Zong Qinghou, chairman of Hangzhou Wahaha Group, said lengthy approval procedures have affected business operations. Photo: Bloomberg
Zong Qinghou, chairman of Hangzhou Wahaha Group, said lengthy approval procedures have affected business operations. Photo: Bloomberg

Beijing support encourages business to criticize govt

As China’s top leadership urges more support for small businesses and other productive sectors of the economy, private entrepreneurs appear to have found a new wellspring of courage to criticize the government.

In the past two weeks, Premier Li Keqiang has exhorted Chinese banks to cut their fees and increase loans to small businesses, while the People’s Bank of China freed up more than 1.3 trillion yuan (US$210 billion) of extra liquidity for lending by cutting the amounts banks must keep in reserve, Reuters said.

Supporting small business helps “the real economy and creates jobs”, Li told the country’s state banks.

This business-friendly slant in government has been emboldening entrepreneurs to speak out against the stacked odds that favor state-linked enterprises, according to the British news agency.

“We don’t have equal business opportunities,” said Zheng Jianjiang, chairman of AUX Group Co., an air-conditioner and home appliance maker that employs more than 20,000 workers nationwide.

“Whenever there is a big cake, the state-owned enterprises eat the whole thing. We can hardly take a bite.”

Liu Yonghao, founder of agribusiness giant New Hope Group, has also been grumbling aloud.

“Lots of firms have gone belly up very quickly because they can’t get money from banks nor help from the government,” he told Reuters last month.

Mao Shoulong, a professor at the School of Public Administration and Policy at Renmin University in Beijing, said such tactical criticisms were a recognition that government was trying to help.

“Companies are asking for more support because they’re starting to see the benefits from existing policy,” Mao said. “They want to get more.”

China’s non-state sector accounts for about 80 percent of the country’s employment, more than half its tax revenue, and 60 percent of economic activity, which amounted to 63.6 trillion yuan last year.

Bank credit, however, remains decisively skewered towards government-owned businesses, which account for about 50 percent of all lending.

Lending rates for private businesses are usually 30 to 50 percent higher than state firms, said Wang Tian, chairman of Better Life Commercial Chain Share Co. Ltd., a supermarket chain.

“What we need is no more than a level playing field,” Wang said.

The private sector isn’t only taking aim at the state-dominated banking sector, but at the government bureaucracy, too.

Drinks billionaire Zong Qinghou, chairman of Hangzhou Wahaha Group, said lengthy approval procedures were his biggest headache.

“It’s reasonable for [the government] to check out a new factory before it’s up and running,” Zong said at a meeting of the National People’s Congress in March. “But as things stand now, each and every new product introduced at an approved assembly line needs its own approval.”

After waiting half a year to get approval to add bottled water to an existing production line, Zong said he needed to turn to someone with connections at a higher level of government to obtain permissions.

“What the government is supposed to do is leave a company alone as long as it meets standards,” Zong said.

Last month Wu Hai, the 46-year-old founder of Crystal Orange Hotel Group, caused an internet sensation when he posted an open letter to Premier Li on Weibo chiding the government for handicapping the private sector with red tape.

“Companies are servants who never dare to fight back, while ‘public servants’ are masters,” Wu said.

He also took a swing at what he called the “special tax” of official corruption, which is the target of a high-profile campaign by President Xi Jinping.

“All of us in the hotel industry are afraid of three holidays: Mid-Autumn Festival, Dragon Boat Festival and Spring Festival, because that’s time for us to pay the ‘special tax’.”

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