he sustainability of China’s economic growth is in strong need of a new government-business relationship, said Zheng Yongnian, academic chair of the Institute of Public Policy at South China University of Technology, writing in his personal blog on Blogchina.com
China is transforming from a middle-income into a high-income society, a process that will rely heavily on effective government-business ties, the scholar noted. The government’s economic role is one of the major factors that helped economies like South Korea and Singapore escape the middle-income trap, he said, adding that this role is made effective predominantly through the government’s interactions with business entities.
The forming of a “close and clean” government-business tie will first of all require the relationship to be clarified as one between two entities, Zheng said. The current government-business relationship exists predominantly between individuals, namely between officials and businessmen, according to the scholar. This type of relationship is hardly sustainable and very often appears to be the root cause of corruption, he said.
Establishing an open and transparent system for the making and implementation of industrial policies is also key, Zheng noted. Policy implementation appears to be a process that breeds corruption between corrupted officials and profit-seeking businessmen, according to the scholar.
Small-and medium-sized companies will particularly need a healthy contact with the government, Zheng said. He highlighted the necessity for the government to enhance intellectual property protection and establish smaller-sized banks and financial institutions that offer specialized services to small companies.