China's private investment growth has shrunk to a record low in recent months. The country't top economic planner said on Monday that it is impossible for private investment to continue to grow rapidly as the economy slows, and government investment should not compete with private investment.
Private investment increased only 2.8 percent in the first half of the year compared to the same time last year, a record low as businesses decrease in the face of a sluggish economic outlook and weak export.
The National Development and Reform Commission said the government should begin to invest more, partly through special construction funds, to stimulate investment and stabilize the economy.
The government also issued a series of reform plans to boost investment, including allowing financial institutions to hold shares in private companies.
"Through pilot projects of financial institutions, we hope to provide a space that finance and real economy can better combine together, interact and develop well," said Zhang Yong, deputy head, National Development & Reform Commission.
"But it still need to adopt proper ways, obey the law and through the pilot projects to complete the system, so that it can be further promoted."
The NDRC said the reform will also work on reducing approval procedures in some projects.
"Under the new situation, we have some pure marketized projects, especially some small projects, which don't involve problems like the environmental protection," Zhang said.
"As long as it's allowed by the policy, and with enough credit, the projects can be launched directly. We've tried and achieved some results in Guangdong and Zhejiang, and will promote it further on that basis."
Zhang added that government investment will continue to focus on infrastructure construction and projects that affect quality of life, while private investment is mainly in manufacturing and property sectors, the two will compliment each other but not compete.
