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, reported Bloomberg.
According to local newswire, Xinhua News Agency, the government will offer more tax breaks and broaden incentives to more firms, without specifying the industries.
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 per cent of the economy.
To help companies raise funds, it will also back the bond issuance of these companies and lower the threshold for new convertible bonds. China 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 Chinese 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.