Hangzhou Wahaha Group Co (娃哈哈集團) chairman Zong Qinghou (宗慶后), China’s second-richest man, called on the government to increase the role of private business in the economy and said the nation’s prospective next president agrees.
The 66-year-old self-made billionaire, who is a member of China’s legislature, said the nation should cut taxes and allow private investment in more industries.
When Chinese Vice President Xi Jinping (習近平) “comes to power,” he will encourage the development of private enterprise, Zong said in an interview on Saturday.
Photo: Bloomberg
“The government has become a monopoly company that invests in everything,” Zong said before annual meetings of the National People’s Congress that started yesterday. “The biggest hurdle facing China’s economy now is that the government’s income is too high and the people’s income is too low.”
The World Bank last week said China, where state-owned companies control banking, energy and media, needs to depend more on markets and private business to avoid derailing growth.
“It isn’t realistic to drive the economy by exports or investment now,” said Zong, who is a delegate to the legislature from Zhejiang Province, where Xi served as Chinese Communist Party Secretary from 2002 to 2007.
China should boost growth by cutting taxes to increasing -individual incomes, he said.
“Ordinary people still lack money,” he said.
Zong’s rise to wealth began with a 140,000 yuan (US$22,200) loan in 1987 when he and two retired teachers in the city of Hangzhou started their business by selling popsicles, soft drinks and stationery.
He built Wahaha, which means “laughing children” in Mandarin Chinese, into a beverage maker that had 7 billion yuan of profit last year. The privately held company may boost that to 10 billion yuan this year on sales of 85 billion yuan, Zong said.
Wahaha’s growth is rare in China, where the 12 biggest publicly traded companies by market capitalization are all state-owned. The government is the majority shareholder in the nation’s four largest banks, its three biggest oil companies and the largest producers of cars, computers, steel, washing machines and milk. Private investment continues to be limited in industries such as tobacco and banking.
Zong said he planned to propose that the government allow more private companies to open banks and that they be exempted from taxes if they extend financing to small and medium-sized enterprises.
If possible, Zong said he would open a bank because “I have money and my reputation is good.”
His personal wealth was estimated at US$10.7 billion by Hurun Report last year, trailing only the US$11 billion of Sany Heavy Industry Co (三一重工) chairman Liang Wengen (梁穩根).
Foreign businesses have also expressed concern about the role of state-owned companies in China’s economy.
The movement toward a market economy seems to be “pretty much stalled,” Chris Murck, president of the Beijing-based American Chamber of Commerce in China, which counts General Electric Co and Intel Corp as members, said in a January interview.
World Bank President Robert Zoellick said last week in Beijing that China’s economic-growth model is not sustainable and that the nation needs to rely more on markets and the private businesses.
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