The current problem is that investment by the government and State-owned enterprises has been growing too fast while investment by private enterprises has been too small. Therefore, the precondition for stabilizing economic growth is to stabilize the confidence of private enterprises in investment. Though investment by private enterprises has started to grow, the difficulties they face in entering public and monopolistic sectors have not yet been eased. In fact, the development of private sector investment is not only blocked by a policy "glass door", there is also the barrier of a vested-interests glass door. Without substantial breakthroughs in reforming monopolistic sectors, it will remain very difficult for private enterprises to enter them.
Investment transformation raises new requirements for the allocation of State-owned capital. It should be recognized that State-owned investment deserves the credit for building up China's economy. Nevertheless, if the situation of State-owned capital operating in too many competitive sectors is not changed, it will be very difficult to stimulate the vitality of private capital. Allocating State-owned capital mainly to sectors of public interest to create space for private capital is essential to adapt to the upgrading of the structure of society's aggregate demand at time when there is a shortage of public services. It is also an important measure to prevent capital outflow and to shore up the confidence of private capital in investment.
Landmark building should respect the public's feeling
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