Editor's note: The Paper conducted a recent exclusive interview with Shen Guojun, CPPCC National Committee member, and Founder and Chairman of Yintai Group, and published an article entitled A dialogue with Yintai’s Shen Guojun: Private enterprises have yet to fully recover and require greater attention and support from the government. The following is the full text of the interview:
“Entrepreneurs like us look forward to continued optimization of the business environment and the unleashing of domestic consumption potential. We will also continue to lead by example, develop our enterprises competently, and contribute to the nation’s economic growth.”
Shen, who is a CPPCC National Committee member, and the Founder and Chairman of Yintai Group, recently accepted an interview with The Paper (www.thepaper.cn). For the 2021 two sessions, he has brought a number of proposals with him, addressing topics such as increasing efforts to tackle the problem of “newly appointed officials unwilling to deal with legacy issues” and resolving the financing challenges confronting private enterprises.
To address the financing challenges of private enterprises, Shen said that financing policy precision should be improved, and financial institutions should be encouraged to lend to privately run SMEs. The establishment of a risk compensation fund for privately run SMEs could be considered, and the establishment of regional equity markets that serve private enterprises supported. Methods such as debt restructuring should be encouraged to jointly address stock pledge risks, and more individuals and institutions should be persuaded to participate in private enterprise debt-for-equity swaps.
“In the course of undertaking collaborative projects with local governments, many enterprises still face situations whereby government commitments or agreements have yet to be fulfilled, have been deferred or are in default. Some debts involving local governments have dragged on for a long time. In some areas, once a key leading cadre’s position is adjusted, collaborative projects previously agreed upon become hot potatoes, and some successors are not keen to advance the implementation of such projects. Shen told The Paper’s reporter.
In this regard, Shen proposed that the cadre management mechanism should be improved, and the accountability and appraisal of leading cadres enhanced. Government investment projects should be rigorously reviewed so that a checking mechanism may be put in place to nip new debt in the bud. Multiple financing channels should be employed to raise funds to settle all existing debts.
It is reported that Yintai Group, founded by Shen in 1997, is a diversified industrial development and investment group involved in numerous sectors including retail, property, gold, tourism, investment and finance. It owns many listed companies in China and abroad, and holds equity stakes in more than 100 companies.
The following is a record of the dialogue between The Paper’s reporter and Shen, CPPCC National Committee member, and Founder and Chairman of Yintai Group:
The Paper: What proposals have you brought this year, and how do you feel compared to the last two years?
Shen: This year, I have four proposals that offer advice on accelerating post-COVID-19 private enterprise development, addressing the legacy issues involving local government-enterprise collaboration, normalizing the use of credit disciplinary measures and elevating the status of the ocean carbon sink strategy from the perspectives of business, social governance and environmental conservation.
Last year, many enterprises, including individuals were nervous and at a loss, but this year, we’ve entered a normal period of prevention and control. NPC deputies and CPPCC National Committee members have been very proactive in cooperating with the various prevention and control measures. The national economy has also gradually recovered from its post-epidemic trough, and society, as a whole, has established a set of effective prevention, control and response mechanisms. Entrepreneurs now have a deeper understanding and thoughts about how to better face similar challenges and develop in the future. These have made us more confident about the future, and our sense of purpose and responsibility more explicit.
The Paper: Two of your proposals are concerned with the business environment of private enterprises. As a representative of private entrepreneurs, you have highlighted two major issues in particular, “newly appointed officials unwilling to deal with legacy issues” and the financing challenges private enterprises face. In your opinion, what problems do private enterprises face?
Shen: Two of my proposals this year are related to private enterprise development. One calls for improving financing policy precision, and encouraging financial institutions to lend to privately run SMEs to help private enterprises recover from COVID-19 as soon as possible so that private enterprises can feel a sense of fulfillment. The other proposal seeks to standardize local government-enterprise collaboration to further enhance governance issues related to “newly appointed officials unwilling to deal with legacy issues”. These two topics are pain points private enterprises are generally concerned about. They are also more prominent issues in the process of optimizing the business environment. I have also put forward some pertinent recommendations, and hope to be able to advance these issues so that they would be resolved.
I have learned from various chambers of commerce and trade associations that many enterprises, in the course of undertaking collaborative projects with local governments, still face situations whereby government commitments or agreements have yet to be fulfilled, have been deferred or are in default. Some debts involving local governments have dragged on for a long time. In some areas, once a key leading cadre is transferred, collaborative projects previously agreed upon become hot potatoes, and some successors are not keen to advance the implementation of such projects.
So I recommend that the cadre management mechanism be improved, and the accountability and appraisal of leading cadres be enhanced. Government investment projects should be rigorously reviewed so that a checking mechanism can be put in place to nip new debt in the bud. Multiple financing channels should be employed to raise funds to settle all existing debts.
We have also found that many privately run SMEs still face financing challenges. Difficulty securing financing and the high cost of financing are two key issues that dog private enterprises. The real economy, and SMEs in particular, have been badly affected by the outbreak of COVID-19 in 2020. A series of central and local government policies have been implemented to encourage financial institutions to extend credit to privately run SMEs so that these may recover from the pandemic. However, the actual coverage of financing policies such as the “pandemic debt” is limited, and the sense of fulfillment of some the industries and enterprises remains fairly weak.
Therefore, my proposal calls for further improving financing policy precision and encouraging financial institutions to lend to privately run SMEs to help private enterprises recover from COVID-19 as soon as possible so that private enterprises can feel sense of fulfillment. I think that we should guide financial institutions toward linking their performance appraisal to supporting private enterprise development, and raise the appraisal weighting of the business of lending to private enterprises. We should consider setting up a risk compensation fund for privately run SMEs, support the establishment of regional equity markets that serve private enterprises and encourage adopting methods such as debt restructuring to address stock pledge risks. More social strength should be invited to participate in private enterprise debt-for-equity swaps.
The Paper: It’s been a year since the outbreak of COVID-19. What is your opinion on how well the government and enterprises have done in terms of post-COVID-19 economic recovery, and do you think they have achieved the goals they envisioned? Taking into consideration intermittent re-emergence of COVID-19 earlier this year, and normal trends in prevention and control, would these create pressure for business operations?
Shen: COVID-19 has been around for more than a year now, and its ramifications have been widespread during this period. F&B, retail and tourism are some of the industries that have been badly hit. The current situation shows that the adverse impact of COVID-19 will remain for the foreseeable future and will not abate fully any time soon.
Surveys from the chambers of commerce and trade associations suggest that private enterprises have endured a challenging year; cost, revenue and profit have been significantly affected. No one has given up though. Many private enterprises have taken advantage of this period to lay a more solid foundation for their business. Some private enterprises with better fundamentals have already begun to recover slowly, but on the whole, private enterprises are not out of the woods yet. They still require continued care and support from the government.
In fact, we have now entered a normal stage of post-COVID-19 prevention and control. Under the guidance and help of the government, many enterprises have put in place relatively sophisticated prevention and control response mechanisms. As large-scale vaccination takes place, I believe that COVID-19 will be better controlled, and its direct impact on the economy will lessen, bolstering the growth momentum of enterprises.
The Paper: 2021 marks the first year of the “14th Five-Year Plan” period. As a representative of private enterprises, what sort of contribution do you think private enterprises can make to help achieve the 2035 goals and what sort of responsibility should they undertake?
Shen: I think China’s economy will continue to exhibit great resilience and vitality going forward. The “dual circulation” development pattern, in particular, will see consumption upgrading usher in growth opportunities for the entire domestic consumption market. Consumption scenarios will become more diverse, and consumption experience more extensive. I believe that more outstanding enterprises will emerge in an increasing number of sub-sectors during the “14th Five-Year Plan” period.
Entrepreneurs like us look forward to continued optimization of the business environment and the unleashing of domestic consumption potential. We will also continue to lead by example, develop our enterprises competently, and contribute to the nation’s economic growth.
The Paper: You also have a proposal related to environmental conservation which recommends making blue carbon a path toward “carbon neutrality”. How do you think blue carbon can contribute to the current environmental conservation process and what positive role will it play?
Shen: China has a comprehensive plan to address climate change. It expects carbon emissions to peak by 2030, and looks to achieve carbon neutrality by 2060. On the path toward attaining carbon neutrality, I believe that controlling emissions and decarbonization development are critical, but we should also enhance the role the natural ecosystem plays in carbon sequestration.
In addition to the specific goals of peak carbon emission by 2030 and carbon neutrality by 2060, China’s plan to address climate change also includes increasing its volume of forest stock to 6 billion m3 compared to that in 2005. No one, however, has mentioned anything about the ocean, which is a massive carbon reservoir and an enormous carbon sink.
In fact, the ocean has greater potential for dealing with climate change than the terrestrial ecosystem. The ocean covers 71% of Earth's surface, and is the source of all life on Earth. Half of the oxygen we breathe in comes from the ocean, and it absorbs 25% of the CO2 we emit each year. Blue carbon was only highlighted internationally in 2009, and its purpose is to maximize the carbon sequestration potential of the ocean ecosystem. I would like my proposal to draw people’s attention to the ocean, and promote work related to blue carbon.
The Paper: From an enterprise’s perspective, in addition to responding to policy, what impact and effect do environmental conservation, emission reduction and carbon neutrality have on the environment and businesses?
Shen: For businesses, more rules for low carbon development will be introduced, which will have an impact on commercial production. A painful transformation process could ensue, but I think transformation is necessary, so enterprises should prepare in advance and meet these challenges. Second, a lot of new business types and opportunities will emerge during the transformation period. We should take note of them, and be involved in this general trend. We should leverage the innovative spirit of entrepreneurs and help facilitate this transformation. Third, I think this is also an opportunity for entrepreneurs to think about our social value. Enterprises are a pillar underpinning society. Only if we play our role better can we promote better growth for the whole society.
The Paper: Climate change is a challenge that confronts the entire human race. What do you think we can do given China’s current phase of economic development? Taking into consideration the actual state of China’s condition, will specific policies and methods or approaches be adopted that differ from other countries?
Shen: From an enterprise’s point of view, we should make adequate preparation ahead of time. For instance, we should take stock of our enterprise’s carbon footprint, and on this basis, come up with our own carbon neutrality goal and specific measures to actively cooperate with the various activities of the State in its quest to attain this goal.
I have seen a lot of provinces and municipalities announcing their individual plans and goals for carbon neutrality. That’s a really good sign. One the one hand, the State has an overall arrangement, and each province and municipality have made corresponding plans according to their own situation. This will help society as a whole jointly promote ecological progress and environmental conservation.
I would advise that we give full priority to the role the natural ecosystem plays in addressing climate change during this process because protecting nature is a choice you will not regret. When the natural ecosystem is healthy, her role in addressing climate change with strengthen further. That’s like building a “firewall” for the human race. Elsewhere, I want to reemphasize the role of the ocean. It is the cradle of the human race and all living things. It is also an important resource on which we need to rely. We must do our best to protect the ocean.