英國鄧迪大學留學生經濟方面的碩士課程essay范文模板下載-What are the major obstacles that confront Chinese private firms in today’s China?”

民營企業公司已成為中國經濟最有活力的，但國有或國家連接的企業有許多特權。中國民營企業在今天的中國面臨的主要障礙是什么？“

根據國家發展和改革委員會報告公布，直到2007六月年底，一些中國的中小企業（主要是民營企業）已達42000000以上，占企業總數的99.8%，其中，一些中小企業，經工商部門注冊的4600000，和一些個體經營戶超過38000000（中國簡報，2007）。

近年來，我國的外匯管理體制在中國經歷了重大的改革。隨著日益放松外匯管制，只要有外匯管制，金融支持政策不鼓勵民營中小企業開展對外直接投資，與私人資本海外投資自由將無法實現。

1. Introduction
According to the report released by the National Development and Reform Commission, until the end of June 2007, the number of China's small and medium enterprises (mainly private enterprises) has reached more than 42 million, accounting for 99.8% of the total enterprises nationwide, in which, the number of SMEs registered by the business sector was 4.6 million, and the number of self-employed households was more than 38 million (China Briefing, 2007). Proportions of GDP, taxes and import and export of SMEs accounted for 60%, 53% and 68%. http://www.400190.com/  provided more than 75% of urban jobs, 80% of laid-off workers of state-owned enterprises were re-employed in SMEs. Moreover, 66% of China's invention patents, more than 82% of new product development are done by the SMEs (China Daily, 2011). SMEs have become an important driving force of China's economic and social development, and play an irreplaceable role. However, behind the rapid development of SMEs, especially the private enterprises, as opposed to state-owned enterprises, they still face difficulties and obstacles in the freedom of capital. The following will be from four aspects to analyze the problem of capital freedom in Chinese private enterprises: the freedom to maintain capital, the freedom access to capital, the freedom to enter the industry and the freedom of capital inter-district and international mobility.

2. Obstacles to maintain the capital: lack of protection of property rights
The freedom to maintain the capital actually refers to the freedom by the enterprise capital from infringing upon the rights. This is the most basic and critical part of the enterprise capital freedom. Only when its own capital property locates in safety, enterprises will be back and forth investment and production, then the economy and society can maintain stability and prosperity. In the transformation of China, compared with other types of enterprises, especially state-owned enterprises, the environment for the development of private enterprises in China can be quite negative.#p#分頁標題#e#

Protection of property rights of private enterprises is the lack of a clear legal basis. China has so far not yet a "Civil Code" to systemically define and protect property rights. The legality of the property of private enterprises has not yet obtained the clear political protection. Chinese Constitution does not explicitly protect the property rights of private enterprises, the degree of protection of private enterprise and private property in the constitutional provisions is significantly weaker than the protection of public property (Garnaut, 2001). The vague definitions of “Improve macroeconomic regulation”, “Disrupt economic order" can always be used as an excuse for regulation of private enterprise. Due to the different treatment of private enterprises and state-owned enterprises in the eyes of the Government, the biggest victims since the previous macro-control are the private enterprises. For example, in 2010 in a new round of tightening macro-control, the private steel enterprise of Jiangsu Tieben was forced to shut down, resulting in a huge loss.

Part of private enterprise are not clear property rights, such as Red Hat and affiliated enterprises; or so-called "original sin" problem exists on the security of property rights, property rights sources are widely suspected to be illegal. The problem of Red Hat Enterprise in the late 1990s began to pay attention and then formed a general redefinition of property rights (Wu, 2003). They aimed to take off the "Red Hat", and transform the property rights system. Although this process produced a large amount of cost, and there are also a lot of controversies, in the overall point of view it is beneficial to the future development of the enterprise.

The enterprise itself by the legality of property rights questioned, there are many problems. First of all, due to the lack of an open and transparent implementation platform, asset evaluation, pricing, sale, and rehabilitation are dealt with black-box operation by local governments and departments, which is lack of procedural legitimacy (He, 2009). Second, in terms of the large number of cases reported, indeed there exist widespread illegal transactions. Finally, some public are indeed often confused assets and in-kind concept and they do not understand the zero "displacement" and "negative" displacement appeared in restructuring for many small and medium-sized loss-making enterprises (i.e. gratis or subsidizing). In any case, the question of "original sin" of property rights restructuring makes the private property rights with legitimate acquisitions from restructuring also in the threat of the "usual suspects".

In addition to the "original sin" problem, the safety of the property rights of these enterprises is also faced with many dangers brought by the incomplete transformation. They often take the form of a limited liability company, coupled with a number of collective and state-owned shares (Chao and Yang, 1985). This leads to on the one hand, some private operators (many original business) actually still occupied countries and collective assets, this is nothing more than sit real public allegations of embezzlement of public assets; on the other hand, the incomplete exit of state-owned assets also provides a convenient way to infringement of private capital for state power.#p#分頁標題#e#

3. Obstacles to access to capital: financing difficulties
Despite private enterprises have become an important pillar of the national economy, but the freedom of capital financing has lagged far behind, there is a serious impediment, which restricts the development of enterprises.

Due to long-term impact of the planned economic system and traditional awareness, the financial sector still cannot treat equally to the non-public enterprises, and there is the phenomenon of "discrimination" of private enterprises. Private enterprises are difficult to enter the bank credit market. The fourth private sector survey data in 2011 show that when borrowing from banks, 63.3% of enterprises found it difficult and very difficult; the answer to general accounted for 22.1%; relatively easy loans accounted for only 14.6% (Lin and Zhu, 2011). The not smooth exogenous financing channel results in private enterprises are highly dependent on endogenous financing. At the same time, the external financing of private enterprises is based on bank credit. However, the support by the bank loans is not enough. From 2007 to 2011, the proportions of private enterprises loans issued by the bank were 3.03%, 3.42%, 3.80%, 3.73% and 3.72% to the total loan balance, respectively (Corporate & Commercial, 2012).

The stock market is another major corporate finance channel. Because of the lack of the second board market and the OTC market, the vast majority of the equity capital transactions are concentrated in Shanghai and Shenzhen, and private enterprises in this market encountered many obstacles. In the end of 2007, there were only 118 private enterprises in 1175 A-share listed companies in Shanghai and Shenzhen, including 65 RTO. While in the first half of 2011, in more than 1,300 domestic listed companies, private enterprises including backdoor listing were just over 200 (Lin and Zhu, 2011). In the face of too high listing threshold, many private enterprises take the initiative to exclude the stock market in financing channels.

Apart from the issue of shares to raise funds, another commonly used mode of financing is the issuance of bonds. China's corporate bond market shows growth retardation, small scale, and ups and downs. Even so, private enterprises are completely excluded. From 1994 to the present, almost all of the national key construction projects get the debt issuance license, in which the large state-owned enterprises directly under the central government accounted for most of the special wholesale debt limit, while the private enterprises’ opportunity to issue external bonds to finance was almost zero.

In the bill market, private companies are trying to use the issue of promissory notes to financial intermediation, but encounter many difficulties. Corporate credit support is the most prominent feature, private enterprises, especially SMEs, have disadvantage in this regard. Even private enterprises have sufficient credit issued bills, but the influence is usually weak (Gregory and Tenev, 2001). Due to the long distance relationship with the bank, the required financing scale is also limited, and therefore tend to pay higher distribution costs and underwriting fees, and the coupon rate is also likely to be relatively higher, making the financing costs increase.#p#分頁標題#e#

Coexisted with the formal financial market is the private financial market. Because of the closed and rigid formal financial market, the private finance is actually an alternative financing channel provided by the private enterprises, especially small and medium-sized enterprises (Tan, 1996). However, for a long time, China is essentially a negative assessment on the private finance, and the law is not conductive to the private finance. Although the government in recent years began to publicly affirm some positive roles of private finance, the suppression of private financial policies in general has not changed. Furthermore, although the Chinese law allows private lending, as long as the interest rate is not more than four times higher than the bank lending rate, at the same time it set up financing fraud, illegal absorb public deposits and other charges (Zhou, 2008). Due to the fact that most types of private financial activities can wear these hats, so the private financial activities are difficult to obtain the protection of the law. Sometimes local governments deal with the devastating blow with specious charges to private financial activities, for example, the Hebei Dawu Group event.

4. Obstacles to enter the industry: when there is no discrimination
From the freedom of enterprises to enter the industry point of view, China's small and medium enterprises have wide operating range, in addition to aerospace, finance, insurance, and other technology, high degree of capital-intensive and state-controlled special industry, it involves almost all competitive industries and fields, in particular labor-intensive industries and traditional industries. From the industry distribution point of view, although it faces some barriers to entry, the SME capital still enters the country's most competitive industries.

A problem on the capital investment of private enterprises in China is the scale and industry of investment in fixed assets in enterprises may not be determined by the market and the willingness of private capital, but largely constrained by the country's macro-control policies (Tsai, 2007), such as the control of the indicators of land and the macro-control of the overheated sectors. Private capital is often in the cracks of the national macro-control policies and the interests of local governments, and is often difficult to calm and rational investment choices. JiangsuTieben Event is a painful lesson for the private capital investment in fixed assets.

The other hand, private enterprises to enter the field of general competition also face a series of unfair treatment, such as the discrimination of financial and tax policy. Taxation of the private economy has made great contributions. Corporate tax of all forms of ownership in 2010 amounted to 2.5723 trillion yuan, generalized private economy accounted for 71.3% of total tax. Although the tax contribution of the private economy is great, private enterprises have suffered many tax discriminatory treatments: the private enterprises have to pay 33% corporate income tax, profit after tax also needs to pay 20% of the personal income tax adjustment (Ding, 2010). Tax law gives foreign-invested enterprises the enterprise income tax preferential policies, however, private enterprises cannot enjoy.#p#分頁標題#e#
What mentioned above are the general competitive sectors. In the financial sector, private enterprise can be said to move an inch. Banking supervisory authorities set a higher threshold for the establishment of financial institutions, in recent years, the real case approved the establishment of private banks so far is just an isolated incident. From the policies and regulations point of view, in the area of capital access, private capital into the banking sector seems to have been no legal impediment, but the actual obstacles are still abound, most of them that can be able to enter financial sector are quite strong private enterprise.

Government usually adopts the suppression policy to the private financial industry in general, and allows only non-organized form, or allows the existence of some strict examination and approval of the quasi-private financial industry (Liu, 2003). The non organized form is the direct lending between individuals, but between enterprises it is non-borrowing, and lending rates shall not be more than four times higher than the bank interest rate over the same period. The quasi-private financial sectors after strict examination and approval include the private lending agency, pawn broking enterprises. Either private financial organizations or activities are not allowed to engage in the behavior of the deposits from the public or disguised deposits from the public.
It is worth noting that private enterprises can freely exit from that part of the unregulated private financial sector. However, its operations are often vulnerable to be suppressed by the government, because its exit sometimes is mandatory, belonging to the object to be cleaned up. Particularly in relation to deposits from the public or in disguised deposits from the public it is especially in the case.

Despite the policy text explicitly releases in the field of public utilities, but the field is still the industry for the capital of private enterprises quite difficult to enter, there are a large number of policy barriers. According to statistics, in the electricity, gas and water production and supply industry, private investment accounted for only 3.2%; in the transport, post and telecommunication industry, private investment accounted for only 0.7%. Furthermore, in more than 80 kinds of Chinese industry, there are 72 industries allowing the state-owned capital to enter, 62 industries allow foreign capital to enter, while only 41 industries allow private enterprises to enter (Lin and Zhu, 2011). Even some industries been liberalized, the relevant supporting policies for private capital to enter are not implemented in practice, and cannot be treated equally. Taking Beijing as an example, today in more than 30 industries or projects in the financial, railway, highway, telecommunications, still exist to varying degrees discriminatory provisions on the access of the private economy.

5. Obstacles to capital flows: Unlocking the shackles of control
Domestic barriers to the capital flows of private enterprises in China are mainly reflected in the following aspects (Young, 1995): private enterprise offsite investments sometimes encounter legal safety issues, these problems are often associated with the local behavior of local protectionism; countries in a quasi-monopoly of the national state-owned commercial bank systemically absorb the resident deposits and provide loans to state-owned enterprises, private enterprises exist serious problem of financing; legal provides no borrowing between #p#分頁標題#e#http://www.400190.com/Assignment_Writing/enterprises, enterprises shall not engage in illegal fund-raising deposits from the public or in a disguised deposits from the public, which seriously affect the cross-regional investment; current laws and policies virtually provide no market access framework for the creation of private banks, and only a few private banks established only by special approval from the central financial authorities, which also affects the private enterprises by creating private banks to cross-regional capital operation; the total number of listed companies on China's stock market is still limited, the private enterprises occupy a small proportion.

When the private capital enters overseas markets, it faces a series of obstacles of foreign exchange management, mainly as follows: first, strict examination and approval. The project with cash investment of more than $ 1 million must be reported to the Ministry of Commerce for approval; second, lack of unified, authoritative management institutions; third, burdensome program and long approval cycle (Lin and Song, 2007). Take Beijing, for example, overseas investment project with less than $ 1 million must go through the project approval sets of procedures. Examination and approval procedures must be through the Departments of Commerce, the Municipal Bureau of Commerce, the Commercial Section of the Consulate, often missed investment opportunities, and the intensity of preferential policies to support SMEs is extremely limited; fourth, the integration of the corporate and financial industry has made little headway, and without the support and participation of the financial sector, enterprise overseas loans and project guarantees bear the huge risk which weakens the ability of multinational corporate finance.

In recent years, the foreign exchange management system in China has undergone a major reform. With the increasingly relax foreign exchange controls, as long as there are foreign exchange controls, financial support policy cannot encourage private small and medium enterprises to carry out the foreign direct investment, and the private capital overseas investment freedom will cannot be achieved.

6. Conclusion
The emergence and development of the private economy in China is the inevitable product of China's economic reform. For the study of capital operation in the development of private enterprises, on the one hand, it can provide beneficial development ideas for the rapid and healthy development of China's private enterprises. On the other hand, it can provide reference for accelerating and deepening the reform of state-owned enterprises. This paper concludes that at this stage of private enterprise capital operations, in addition to the intrinsic value-added motivation of capital itself, the major motivation comes from the capital market traction and the wide range of development space provided by the state-owned enterprises reform for private enterprise. Although private enterprises in the process of capital operation there are old ideas, institutional constraints, obstacles and market imperfections, because the operating mechanism of private enterprises is in line with the development of the market, it has so great vitality. The private economy will be faced with a flourish of golden opportunity. Private enterprises on the one hand should do a good job on the product operation level, the other hand, more attention should be paid to the business value level, and these two are indispensable. Private enterprise in the development process, on the one hand, should make efforts to overcome their own shortcomings, on the other hand they want to use a variety of effective means of capital operation, in order to achieve the goal of maximizing corporate value, so that the strength and size of enterprises can be rapid development and expansion, and play a bigger role in China's economic development.