Guide reading

Over the past 40 years of reform and opening up, China has made great achievements in economic and social development that have attracted worldwide attention. macroscopically, from a planned economy to a market economy, and microscopically, the private economy has grown from scratch, from small to large, and from "0" to "56789". A number of world-class excellent enterprises such as Huawei, Tencent and BABA have emerged, which have become the mainstay of the great rejuvenation of the Chinese nation.

The private economy has made great contributions to the high-speed and high-quality development of China's economy, but it is currently facing many difficulties and unprecedented challenges, so it is urgent for a new round of reform and opening up. Following the widespread concern about "the intention to fall flowers-the current living environment and suggestions for private enterprises", we continue to explore in depth the major theoretical and practical issues of the development of China's private economy.

Core viewpoints

1. Private enterprises are the micro-foundation of market economy, with clear property rights, effective incentives and constraints, creating value through price and competition mechanism, and high efficiency of resource allocation.

The success of reform and opening up is the success of market-oriented reform and globalization and opening up. The third Plenary session of the 18th CPC Central Committee proposed to "make the market play a decisive role in the allocation of resources". Private enterprises are the micro-foundation of market economy, the important main body to actively participate in global competition, and complete state-owned enterprises are the micro-foundation of planned economy.

Because of clear property rights and effective incentives and constraints, private enterprises can really give full play to the role of price and competition mechanism and improve the efficiency of resource allocation. China's transition from a planned economy to a market economy is a process of continuous improvement in total factor productivity. Because of natural monopoly and public goods, it is necessary for state-owned enterprises to exist and be limited to specific areas.

State-owned enterprises and private enterprises should give full play to their respective advantages: private enterprises are concentrated in general competitive fields, while state-owned enterprises are concentrated in non-competitive areas such as natural monopoly, public goods, national economy and people's livelihood. At present, China urgently needs to promote major theoretical innovations and medium-and long-term institutional arrangements for the development of the private economy, so as to effectively boost the confidence of private entrepreneurs and promote the sustained and healthy development of the private economy.

State-owned enterprises have significant advantages in obtaining approval, government procurement and low-cost bank financing, but their market performance is weaker than that of private enterprises. for example, the total return on assets (ROA), return on net assets (ROE) and ROA and ROE of state-owned holding industrial enterprises are significantly lower than those of private industrial enterprises.

There are three reasons: first, the public ownership of property rights leads to the absence of owners; second, institutional factors lead to insufficient incentives and constraints; third, social and public responsibilities lead to heavy burden. That is, Friedman put forward that private enterprises are "spending their own money on their own affairs, both efficiency and economy", while state-owned enterprises are "spending other people's money on other people's affairs, neither saving nor efficiency."

2. In the past 40 years, China has created an "economic growth miracle" that has attracted worldwide attention. The most fundamental reason is reform and opening up. The main driving forces are the development and growth of private enterprises, the large-scale entry of foreign-funded enterprises and the deepening reform of state-owned enterprises.

3. The private economy has made great achievements from "0" to "56789" in the past 40 years.

1) Private enterprises contribute more than 50% of tax revenue, and private enterprises are the biggest contributors to government tax revenue and national financial resources. In 1985, ownership by the whole people accounted for 71.7 percent of the national industrial and commercial tax revenue, collective ownership accounted for 24.1 percent, and the individual economy accounted for only 3.0 percent. From January to July 2019, private enterprises accounted for 56.9 percent.

2) Private investment accounts for more than 60%, and manufacturing investment accounts for more than 85%. Private enterprises are the biggest driving force of investment. In 1980, of the total investment in fixed assets, the state-owned economy accounted for 81.9%, the collective economy accounted for 5.0%, and the individual economy accounted for 13.1%. From January to July 2019, private investment in fixed assets accounted for 60.3%, accounting for more than 85% of investment in the manufacturing industry.

3) Private enterprises account for more than 75% of invention patents, and private enterprises are the main force of China's scientific and technological innovation. From 2000 to 2017, the number of patent applications, invention patents and valid invention patents of industrial enterprises above scale in China rose rapidly from 2.62,0.80 and 15300 to 81.70,32.06 and 934000 respectively. In 2017, private enterprises accounted for 77.8% of patent applications, 77.4% of invention patents and 75.8% of valid invention patents.

4) the employment stock of private enterprises accounts for nearly 80%, and the increment accounts for more than 100%. Private enterprises are the greatest guarantee of urban employment. In 1978, 95.14 million people were employed in cities and towns, of which 74.51 million were employed in state-owned units and 20.48 million in urban collective units, while only 150000 in the individual economy, accounting for 0.16 percent. In 2017, 424.62 million people were employed in cities and towns, of which private enterprises and individual economy accounted for 53.4%, all private enterprises accounted for nearly 80%, and the proportion of increment exceeded 100%.

5) the number of private enterprises accounts for more than 95%, and private enterprises are the largest main body of the micro-foundation of China's economy. In 1978, there were only 150000 individual industrial and commercial households in China, and there were no private enterprises. In 2017, the number of individual industrial and commercial households increased to 65.7937 million, and the number of private enterprises increased to 27.2628 million. In 2017, the number of enterprise legal persons in China was 18.0977 million, with private holding enterprises accounting for 97.0%.

4. At present, private enterprises still suffer from explicit or implicit ownership discrimination to a certain extent.

1) ideologically, there are still some far-left remarks that cause panic. After 40 years of reform and opening up, absurd remarks such as "private economy leaving the market" and "new public-private partnership" can still cause widespread debate in society and panic among private entrepreneurs, indicating that the backward concept of planned economy has not been completely eliminated.

2) Private enterprises have not been treated fairly and fairly in policy. State-owned enterprises have a close relationship with the government and enjoy various policy preferences, such as government procurement and market access, especially the administrative monopoly of some industries. Policies such as eliminating production capacity and limiting production by environmental protection are all good intentions and the general direction is also right, but there is a certain deviation in the grasp of implementation and degree, and the impact on private enterprises is even greater.

3) Private enterprises are discriminated against by ownership to a certain extent in financing. State-owned enterprises enjoy implicit government guarantee, soft budget constraints make them have the investment impulse to borrow heavily, and financial institutions are also willing to provide them with adequate and cheap financial support, crowding out private enterprises. Recently, under the background of financial deleveraging and the slowdown of credit expansion, the financing environment of private enterprises has deteriorated. Private enterprises contribute "56789" of the national economy, but only occupy about 40% of the credit resources, which does not match their economic contribution.

Of course, it needs to be objectively recognized that there are also some problems in the operation and development of some private enterprises, such as substandard environmental protection, non-standard tax and social security payment, blind expansion, product homogenization, lack of innovation, and so on. It is necessary to distinguish between normal market clearance and policy errors, so as to promote the standardized and healthy development of the private economy.

5. make greater efforts to promote a new round of reform and opening up, support and promote the development of the private economy, and realize the great rejuvenation of the Chinese nation.

At present, there is great downward pressure on China's economy, but there is great potential for growth, and the best investment opportunity is in China, which needs to make greater efforts to promote a new round of reform and opening up. The private economy is the barometer of China's reform. Every step forward in the reform is a further loosening of the private economy, and it will usher in the great development of the private economy.

In the future, the proportion of private economy will continue to rise, which will contribute to the rise of China's great power and realize the great rejuvenation of the Chinese nation. 1) speed up the classified reform of state-owned enterprises and fully liberalize market access for general competitive areas; 2) deepen financial supply-side structural reform and develop multi-level capital markets; 3) cultivate new economic growth points to promote high-quality economic development.

Text

Over the past 40 years of reform and opening up, China has made great achievements in economic and social development that have attracted worldwide attention. macroscopically, from a planned economy to a market economy, and microscopically, the private economy has grown from scratch, from small to large, and from "0" to "56789". A number of world-class excellent enterprises such as Huawei, Tencent and BABA have emerged, which have become the mainstay of the great rejuvenation of the Chinese nation. The private economy has made great contributions to the high-speed and high-quality development of China's economy, but it is currently facing many difficulties and unprecedented challenges, so it is urgent for a new round of reform and opening up. Following the widespread concern about "the intention to fall flowers-the current living environment and suggestions for private enterprises", we continue to explore in depth the major theoretical and practical issues of the development of China's private economy.

1 Private enterprises are the micro foundation of market economy, with clear property rights, effective incentives and constraints, creating value through price and competition mechanism, and high efficiency of resource allocation.

The success of reform and opening up is the success of market-oriented reform and globalization and opening up. The third Plenary session of the 18th CPC Central Committee proposed to "make the market play a decisive role in the allocation of resources". Private enterprises are the micro-foundation of market economy, the important main body to actively participate in global competition, and complete state-owned enterprises are the micro-foundation of planned economy. Because of clear property rights and effective incentives and constraints, private enterprises can really give full play to the role of price and competition mechanism and improve the efficiency of resource allocation. China's transition from a planned economy to a market economy is a process of continuous improvement in total factor productivity. Because of natural monopoly and public goods, it is necessary for state-owned enterprises to exist and be limited to specific areas. At present, China urgently needs to promote major theoretical innovations and medium-and long-term institutional arrangements for the development of the private economy, so as to effectively boost the confidence of private entrepreneurs and promote the sustained and healthy development of the private economy.

1.1 State-owned enterprises and private enterprises should give full play to their respective advantages

State-owned enterprises and private enterprises complement each other, rather than the competitive relationship of one advance and one retreat. In theory, state-owned enterprises and private enterprises should give full play to their respective advantages: private enterprises are concentrated in general competitive fields, while state-owned enterprises are concentrated in non-competitive fields such as natural monopoly, public goods, national economy and people's livelihood.

1.1.1 Private Enterprises: general competitive areas

In the general competitive field, private enterprises are the best participants. And under the appropriate institutional arrangement, we can take into account the efficiency and fairness of resource allocation. The above conclusions can be proved by the first theorem and the second theorem of welfare economics.

The first theorem of welfare economics: the equilibrium allocation result of competitive market is Pareto optimal. In the general competitive field, the invisible hand of the market can realize the optimal allocation of resources. In order to make the market play a role, it is necessary for all the participating individuals in the market to make rational decisions based on the maximization of their objective function and compete fully with each other. There is no doubt that compared with the state-owned enterprises, the private enterprises are the market-oriented competition subjects more in line with the above settings, and the private enterprises are the micro-foundation of the market economy.

Pareto optimization is the best efficiency, which does not involve the fairness of resource allocation, and the issue of fairness is precisely the place where the market economy is most often criticized. But in fact, the market mechanism is neutral in the allocation of resources, and the market mechanism can achieve the best efficiency and fairness at the same time. The second theorem of welfare economics: any Pareto optimality can be realized through the equilibrium allocation of competitive markets. In the general competitive field, the "visible hand" of the government can make appropriate transfer payments to seek fairness, while the "invisible hand" of the market will spontaneously achieve the efficiency of resource allocation. Under the benign intervention of the government, the market mechanism can strike a balance between efficiency and fairness, so there is no need to worry about the adverse impact on the economy and society after private enterprises occupy a dominant position in the general competitive field.

In the general competitive field, what the government needs to do is to maintain the fairness and order of transactions, prevent collusion and fraud among enterprises, protect the legitimate rights and interests of consumers, constantly improve supervision, optimize market infrastructure, and improve market efficiency. Be a good social "night watchman". The government should not play the game through non-market-oriented means such as state-owned enterprises, be both referees and athletes, violate the market spirit of fair competition and reduce the efficiency of resource allocation in the market.

Of course, the real economy can not be as ideal as described in the theory, but in the general competitive field that is most in line with the basic assumptions of neoclassical economics, the dominance of private enterprises can achieve the minimum deviation from the theoretical assumption. Non-market-oriented state-owned enterprises will inevitably cause distortion.

1.1.2 State-owned enterprises: non-competitive areas such as natural monopoly, public goods, national economy and people's livelihood

Some areas of the real economy do not meet the premise of the basic theorem of welfare economics, and "market failure" occurs from time to time. In the non-competitive fields such as natural monopoly, public goods, national economy and people's livelihood, state-owned enterprises are the best participants.

In the field of public utilities such as tap water, electricity, gas and so on, a large number of fixed costs need to be spent on the laying and maintenance of pipes and lines in the early stage, but the marginal cost of providing corresponding services in the later stage is very low, so it is difficult for this kind of industry to carry out full competition. it is usually monopolized by one or a few enterprises, so it is called natural monopoly. There is a problem in the natural monopoly industry: the condition of the social optimal output is that the price is equal to the marginal cost, but the average cost of the enterprise is significantly higher than the marginal cost, and the enterprise will face a loss at the social optimal output, so there is no sufficient supply motivation. Instead, they will choose to reduce output and raise prices in order to make a certain profit. Insufficient supply will cause social welfare losses, so the government needs to correct it in two ways: one is to regulate private enterprises, limit prices and provide certain subsidies; the other is to be operated directly by state-owned enterprises. the business goal is to maximize social welfare rather than profit.

Another area facing the problem of insufficient supply is public goods, typically represented by national defense, infrastructure, basic scientific research, and so on. Public goods have two major characteristics: non-competitive, the marginal cost of new consumption is zero, the product can be shared by many people; non-exclusive, can not effectively exclude the use of others, the product is difficult to charge. Public goods have strong positive externalities, and it is difficult to prevent "hitchhiking" behavior, resulting in large social demand, but weak production incentives, so that the market supply is significantly lower than the social optimal output, resulting in unnecessary social welfare losses. Therefore, public goods are usually provided by the government, one is that the government buys from private enterprises, and the other is that the government supplies directly through state-owned enterprises.

Some areas go beyond the economic scope, involving politics and military affairs, and are related to the national economy and the people's livelihood. Neoclassical economics advocates comparative advantage and free trade, but in reality, trade and military frictions often occur between countries because of conflict and competition. therefore, military industry, energy and other industries and fields that are related to national security and the lifeline of the national economy are particularly important. The field of national economy and people's livelihood should be independent and should not be controlled by others, so the government can achieve the grand goals of serving the national strategy, ensuring national security and the operation of the national economy, and developing forward-looking strategic industries by expanding and strengthening state-owned enterprises.

Non-competitive areas such as natural monopoly, public goods, national economy and people's livelihood often overlap with each other. For example, the power industry belongs to natural monopoly, which also involves public services and the lifeline of the national economy, and national defense is a public good. The upstream military industry is also related to national security. In these non-competitive areas, the market can not spontaneously achieve the optimal allocation of resources, and government intervention is needed to improve social welfare. Although in theory, related fields such as natural monopoly and public goods can be produced and operated by private enterprises under government regulation and subsidy, due to the difficulty of information collection, regulation cost, goal conflict and other factors, state-owned enterprises may have more advantages. Therefore, in reality, even in the highly market-oriented western developed economies such as Europe and the United States, state-owned enterprises also play an important role in some fields.

1.2 performance comparison between state-owned enterprises and private enterprises

Generally speaking, the efficiency of private enterprises is significantly higher than that of state-owned enterprises. The following takes industrial enterprises as an example to compare the operating benefits of state-owned enterprises and private enterprises.

1.2.1 the operating efficiency of state-owned enterprises is significantly lower than that of private enterprises.

Whether in terms of return on total assets (ROA) or return on net assets (ROE), the performance of state-controlled industrial enterprises is significantly lower than that of private industrial enterprises and foreign investors and industrial enterprises invested by Hong Kong, Macao and Taiwan businessmen.

The supply-side structural reform since 2016 has generally benefited state-owned enterprises, with ROA and ROE rebounding significantly, while private enterprises have experienced a marked decline in ROA and ROE due to the impact of environmental inspectors and financing tightening. Even so, the operating efficiency of state-controlled industrial enterprises in 2018 is only about 60% of that of private industrial enterprises.

1.2.2 the sub-industry performance of state-owned enterprises is also lower than that of private enterprises.

According to the China Industrial Statistical Yearbook 2017, this paper compares the market performance of state-owned enterprises and private enterprises in different industries in 2016.

In most industries, the ROA and ROE of state-controlled industrial enterprises are significantly lower than those of private industrial enterprises. In the highly monopolistic upstream industries such as ferrous metal mining and oil and gas mining, state-owned enterprises have even lost money. State-owned enterprises have comparative advantages only in automobile manufacturing and oil processing, coking and nuclear fuel processing industries.

1.3 Why is the efficiency of state-owned enterprises low?

Why is it that the market performance of state-owned enterprises which have significant advantages in obtaining approval, government procurement and low-cost bank financing is not as good as that of private enterprises?

First of all, the public ownership of property rights leads to the absence of owners. The separation of ownership and management, information asymmetry and incentive incompatibility make every corporate enterprise face the so-called "principal-agent problem", while the public ownership of property rights of state-owned enterprises will aggravate this contradiction. On the one hand, the agency chain of state-owned enterprises is too long, all the people → the State → of the State Council → State-owned assets Supervision and Administration Commission → state-owned assets management company → state-owned enterprise group company →. → the management of a state-owned enterprise →, which leads to a series of problems, such as unclear powers and responsibilities, conflict of interest, high agency cost, low efficiency and so on. On the other hand, the absence of the main body of property rights and the lack of modern corporate governance structure make the problem of "insider control" of state-owned enterprises prominent, and the management of enterprises will damage the interests of the company for their own interests and evade supervision.

Secondly, institutional factors lead to the lack of incentives and constraints. The rigid incentive and restraint mechanism in state-owned enterprises will distort the behavior of micro individuals and reduce the operating efficiency of enterprises: first, the appointment of managers and the overall salary system in state-owned enterprises are usually non-market-oriented, and employees are easy to lose their positivity. unable to attract or retain outstanding talents; second, the state-owned enterprises have a strong bureaucracy and formalism, the working mechanism is rigid, and innovative work is not easy to carry out. Third, the soft budget constraint and the implicit government cover-up make the state-owned enterprises lack the pressure of bankruptcy liquidation, and the managers of state-owned enterprises have no urgency to actively improve the operating efficiency; fourth, the incomplete corporate governance structure leads to the lack of effective supervision and checks and balances on the managers of state-owned enterprises, which leads to behaviors or wrong decisions that harm the interests of the company.

Finally, it is the social public responsibility that leads to the overburden. State-owned enterprises are one of the important tools for the government to achieve economic and social regulation and control, and bear certain social and public responsibilities: enterprises run the society, and state-owned enterprises have to bear the education, medical care, pension and other social welfare and security of their employees, with a heavy burden; even if there are serious losses, it is difficult to lay off staff and reduce expenditure on a large scale, and it is necessary to maintain social stability; to speed up the implementation of new projects in the economic downturn, regardless of the costs and benefits of the project, and so on. The above non-market-oriented behaviors seriously affect the operating efficiency of state-owned enterprises.

The inefficiency of state-owned enterprises can be perfectly explained by property rights theory, contract theory and incentive theory, or more simply, in Friedman's words, private enterprises are "spending their own money on their own affairs, both efficiency and economy". On the other hand, state-owned enterprises are "spending other people's money to do other people's affairs, neither saving nor efficiency".

If the proportion of inefficient state-owned enterprises is too high, it will have many adverse effects on the economy: first, resources cannot be allocated effectively, crowding out highly efficient private enterprises; second, zombie enterprises, overcapacity and high leverage push up systemic economic and financial risks; third, the internal and external imbalance of the economy, insufficient consumption, excessive savings, and sustained trade surplus are all related to the dual economic structure of state-owned enterprises and private enterprises.

The government is also deepening the reform of state-owned enterprises, improving the efficiency of internal property rights reform, introducing competition in opening up the market, strategic focus, business integration, increasing innovation, gradually building incentive mechanisms, and significantly improving market competitiveness.

1.4 two neutral principles: competitive neutrality and ownership neutrality

The key to the low efficiency of state-owned enterprises and the distortion of resource allocation lies in the lack of sufficient and fair market competition. In order to correct market distortions and promote healthy economic development, we must adhere to the "two neutral" principles: competitive neutrality and ownership neutrality.

Competition neutrality means that all market subjects can get the right to fair competition in operation. OECD defines eight principles of competitive neutrality: business scope division, cost supervision, rate of return requirements, subsidy regulation, tax neutrality, regulatory neutrality, credit neutrality and government procurement neutrality. The essence of competitive neutrality is to prevent state-owned enterprises from gaining unfair competitive advantages by relying on their relationship with the government, stimulate the vitality of market subjects by creating a fair and just business environment, and promote efficient allocation of resources and healthy economic development.

Ownership neutrality means that the government treats enterprises of all forms of ownership equally and makes them compete fairly. Ownership discrimination is a major practical problem in China's economy. State-owned enterprises have explicit or implicit access to policies and resources under the endorsement of the government, while private enterprises are at a disadvantage accordingly. Gao Shangquan, former deputy director of the State Economic system Reform Commission, put forward the principle of "ownership neutrality" and regarded it as the premise and basis of the "competition neutrality" principle. Comrade Deng Xiaoping has a famous saying, "No matter whether it is a black cat or a white cat, it is a good cat to catch a mouse." it is precisely to abandon the discrimination of ownership and let all enterprises compete fairly.

(2) the socialist market economic system with Chinese characteristics has been established and improved, and the private economy has changed from "0" to "56789".

In the past 40 years, China has created an "economic growth miracle" that has attracted worldwide attention. The most fundamental reason is reform and opening up. The main driving forces are the development and growth of private enterprises, the large-scale entry of foreign-funded enterprises and the deepening reform of state-owned enterprises.

2.1 Institutional change: from planned economy to market economy

The establishment and improvement of the socialist market economic system with Chinese characteristics provides institutional possibility and guarantee for the recovery and development of the private economy, and its evolution process can be divided into three stages:

1) from 1978 to 1991, the market economy recovered. After the completion of the three major socialist reforms in 1956, there was a deviation in policy eagerness, one-sided pursuit of "one big, two public", the public sector of the economy was close to 100%, and the non-public sector of the economy almost disappeared. In 1978, the third Plenary session of the 11th CPC Central Committee made a great decision on reform and opening up, shifted the focus of the work of the party and the state to economic construction, and created conditions for the development of individual and private economy. The 12th and 13th CPC National Congress have successively confirmed that individual economy and private economy are "necessary and useful supplements to the public sector of the economy." the constitutional amendment in 1988 defined the legal status of private enterprises for the first time. However, from 1989 to 1991, due to the political turmoil in the Soviet Union and the socialist countries in Eastern Europe, the dispute over "surname, society and capital" intensified, people became more worried about the development of private economy, and the development of individual and private economy fell into a low ebb.

2) from 1992 to 2011, the market economic system was initially established. In 1992, Comrade Deng Xiaoping published the "talk in the South" and put forward some important conclusions, such as the theory of the essence of socialism, the standard of "three advantages" and "socialism also has a market". The 14th CPC National Congress established the reform goal of the socialist market economic system, and put forward that public ownership as the main body and the long-term co-existence and development of various economic sectors set off a new round of reform and opening up and reversed the stagnant situation of private economy. In 1998, the reform of state-owned enterprises began with the reform of property rights and the strategic reorganization of "grasping the large and releasing the small". The private economy quickly filled the market field withdrawn by state-owned enterprises and achieved another round of rapid development. The 16th CPC National Congress put forward "two unwavering" for the first time and made it clear for the first time that self-employed and private entrepreneurs are all builders of socialism with Chinese characteristics. China joined the WTO in 2001, fully liberalized the right of foreign trade management in 2004, private enterprises integrated into the globalization, and China's economy took off rapidly.

3) from 2012 to now, the market economic system has been continuously improved. China's economic development has entered a new normal, the development of private economy is facing a series of new difficulties and challenges, and the expectations and confidence of private entrepreneurs have been affected. The third, fourth and Fifth Plenary sessions of the 18th CPC Central Committee made a series of major policy and institutional innovations in developing the economy of mixed ownership, equally protecting the economic property rights of all kinds of ownership, and introducing non-state-owned capital to participate in the reform of state-owned enterprises. The 19th CPC National Congress incorporated the "two unwavering" into the basic strategy of upholding and developing socialism with Chinese characteristics in the new era. General Secretary Xi Jinping pointed out at the forum on private enterprises in November 2018 that private enterprises and private entrepreneurs were "their own people". At the 10th meeting of the Central Committee for comprehensively deepening Reform in September 2019, General Secretary Xi Jinping stressed the need to support the development of private enterprises. adhere to the two "unwavering" to ensure that all forms of ownership economy equal use of factors of production in accordance with the law, open, fair and fair participation in market competition, and equally protected by law.

2.2 Great achievements: from "0" to "56789"

Private economy has made great achievements from "0" to "56789" in the past 40 years. Before 1978, the individual economy existed sporadically, and the development of the private economy was prohibited. Today, private enterprises contribute "56789" of China's economy, more than 50 per cent of taxes, more than 60 per cent of GDP, more than 70 per cent of technological innovation achievements, more than 80 per cent of urban employment and more than 90 per cent of the number of enterprises, which will further rise in the future.

2.2.1 tax contribution of private enterprises to more than 50%

Private enterprises are the biggest contributors to government tax revenue and national financial resources. In 1985, ownership by the whole people accounted for 71.7 percent of the country's industrial and commercial tax revenue, collective ownership accounted for 24.1 percent, and the individual economy accounted for only 3.0 percent. In 2013, private enterprises accounted for more than 50 percent of the country's tax revenue for the first time. From January to July 2019, tax revenue from private enterprises accounted for 56.9%, state-owned enterprises accounted for 26.2%, and foreign investors and Hong Kong, Macao and Taiwan investment enterprises accounted for 16.8%.

2.2.2 Private investment accounts for more than 60%, and manufacturing investment accounts for more than 85%.

Private enterprises are the biggest driving force of investment. In 1980, of the total investment in fixed assets, the state-owned economy accounted for 81.9%, the collective economy accounted for 5.0%, and the individual economy accounted for 13.1%. From January to July 2019, private investment in fixed assets accounted for 60.3%, accounting for more than 85% of investment in the manufacturing industry.

2.2.3 Private enterprises account for more than 75% of invention patents

Private enterprises are the main force of scientific and technological innovation in China. From 2000 to 2017, the number of patent applications, invention patents and valid invention patents of industrial enterprises above scale in China rose rapidly from 2.62,0.80 and 15300 to 81.70,32.06 and 934000 respectively. In 2017, private enterprises accounted for 77.8% of patent applications, 77.4% of invention patents and 75.8% of valid invention patents.

2.2.4 the employment stock of private enterprises accounts for nearly 80%, and the increment accounts for more than 100%.

Private enterprises are the greatest guarantee of urban employment. In 1978, 95.14 million people were employed in cities and towns, of which 74.51 million were employed in state-owned units and 20.48 million in urban collective units, while only 150000 in the individual economy, accounting for 0.16 percent. In 2017, 424.62 million people were employed in cities and towns, of which private enterprises and individual economy accounted for 53.4%, all private enterprises accounted for nearly 80%, and the proportion of increment exceeded 100%.

2.2.5 the number of private enterprises accounts for more than 95%

Private enterprises are the largest main body of the micro-foundation of China's economy. In 1978, there were only 150000 individual industrial and commercial households in China, and there were no private enterprises. In 2017, the number of individual industrial and commercial households increased to 65.7937 million, and the number of private enterprises increased to 27.2628 million. In 2017, the number of enterprise legal persons nationwide was 18.0977 million, of which 1.8 percent were state-owned holding enterprises, 1.2 percent were foreign investors and Hong Kong, Macao and Taiwan businessmen holding enterprises, and 97.0 percent were private holding enterprises.

2.3 remaining issues: ownership discrimination

In terms of system, the socialist market economic system is established, and the market plays a decisive role in the allocation of resources; in reality, private enterprises contribute "56789" and occupy a leading position in the national economy. However, from 2017 to 2018, private enterprises experienced more difficulties in operation, such as financing difficulties, wave of credit debt default, equity pledge risk, etc., and the scum of "private economy departure theory" and "new public-private partnership theory" seriously impacted the confidence of private entrepreneurs. In the final analysis, private enterprises still encounter explicit or implicit ownership discrimination to a certain extent.

First, there are still some far-left remarks that cause panic. After 40 years of reform and opening up, absurd remarks such as "private economy leaving the market" and "new public-private partnership" can still cause widespread debate in society and panic among private entrepreneurs, indicating that the backward concept of planned economy has not been completely eliminated. China needs to carry out another ideological emancipation similar to the discussion of the "Criterion of Truth" to make the concept of market economy really take root in the hearts of the people.

Second, private enterprises have not been treated completely fairly and fairly in policy. State-owned enterprises have a close relationship with the government and enjoy various policy preferences, such as government procurement and market access, especially the administrative monopoly of some industries. Policies such as capacity removal and environmental protection are all good intentions and the general direction is also right, but there is a certain deviation in the implementation and degree of grasp, and the impact on private enterprises is even greater.

Third, private enterprises are subject to a certain degree of ownership discrimination in financing. State-owned enterprises enjoy implicit government guarantee, soft budget constraints make them have the investment impulse to borrow heavily, and financial institutions are also willing to provide them with adequate and cheap financial support, crowding out private enterprises. Recently, under the background of financial deleveraging and the slowdown of credit expansion, the financing environment of private enterprises has deteriorated. Private enterprises contribute "56789" of the national economy, but only occupy about 40% of the credit resources, which does not match their economic contribution.

Of course, it needs to be objectively recognized that there are also some problems in the operation and development of some private enterprises, such as substandard environmental protection, non-standard tax and social security payment, blind expansion, product homogenization, lack of innovation, and so on. It is necessary to distinguish between normal market clearance and policy errors, so as to promote the standardized and healthy development of the private economy.

3 make greater efforts to promote a new round of reform and opening up, support and promote the development of the private economy, and realize the great rejuvenation of the Chinese nation

At present, there is great downward pressure on China's economy, but there is great potential for growth, and the best investment opportunity is in China, which needs to make greater efforts to promote a new round of reform and opening up.

1) China has huge room for development. The per capita GDP in 2018 is more than US $9700, which is the one in the United States and five in the United Kingdom.

2) China's economy is growing at more than 6%, 2-3 times that of the United States, and is expected to become the world's largest economy in a decade's time.

3) at present, the urbanization rate of China's resident population is only 59.6%, the urbanization rate of household registration is only 43.4%, and most of the developed economies exceed 80%. The urban population is expected to increase by nearly 200 million in the next decade, and there is still about 20% room for urbanization in China.

4) China has the largest unified market in the world covering a population of 1.4 billion. Goods, people, services and capital can all flow freely, and there is a huge scale effect.

5) China is rich in labor resources, there are 170 million high-quality talents with higher education and vocational education, more than 8 million college students graduate every year, and the population dividend is moving towards the talent (engineer) dividend.

6) Innovation and entrepreneurship in China is very active, with the United States and China accounting for 48% and 28% of the global new economy unicorn enterprises, respectively.

The private economy is the barometer of China's reform. Every step forward in the reform is a further loosening of the private economy, and it will usher in the great development of the private economy. In the future, the proportion of private economy will continue to rise, which will contribute to the rise of China's great power and realize the great rejuvenation of the Chinese nation.

1) accelerate the classified reform of state-owned enterprises and fully liberalize market access in general competitive areas. We will further relax restrictions on some manufacturing, financial and service industries, set up negative lists, and create a more competitive domestic industrial environment. Relax the regulation in the fields of telecommunications, logistics and energy, reduce the operating costs of other industries, improve the profits of enterprises, speed up the opening up of the automobile industry, promote full competition between domestic and foreign car enterprises, constantly enhance the technology and sales level of domestic automobile enterprises in the competition, and enhance the competitiveness of the automobile industry. The financial services industry will further implement the established opening-up policy and attract more foreign-funded institutions to set up institutions in China to better serve the real economy.

2) deepen the structural reform on the financial supply side and develop multi-level capital markets. Deepen the structural reform on the financial supply side, dredge the transmission channels of monetary policy, innovate monetary policy tools and mechanisms, further improve the ability and willingness of financial services to the real economy, vigorously develop multi-level capital markets, increase the proportion of direct financing, especially equity financing, and broaden the financing channels of private and small and micro enterprises.

3) cultivate new economic growth points and promote high-quality economic development. Socialism with Chinese characteristics has entered a new era, and the principal social contradiction has been transformed into a contradiction between the people's growing needs for a better life and unbalanced and inadequate development. There is still a shortage of education and medical care in the field of people's livelihood, major basic research and development in the field of scientific and technological innovation is still short, and while urban ground transportation is developed, the construction of urban underground pipe network is still very backward-all these require the attention of public policies. with new mechanisms and new opening up. Private enterprises are the largest main body of China's economic micro-foundation, the biggest driving force of investment, and the main force of China's scientific and technological innovation. It is necessary to fully stimulate the vitality of private enterprises and promote high-quality economic development.