Development of Non-public Economy in Tibet

　　Liao Yidong（China）

　　Tibet entered a new historic era after its peaceful liberation in 1951 and has walked the socialist road since its democratic reform in 1959. Due to the unique social situations of Tibet Autonomous Region, its private economy has both commonalities and singularities compared to other parts of China, and faces both opportunities and challenges.

　　Historical Periods and Regional Singularity

　　I. Historical Periods and Policies

　　From Tibet’s peaceful liberation until the early 1980s, the development of private economy in Tibet went through three periods: recovery (1950-1965), stagnation (1965-1978), and restructuring (1979-1983). From then on, the nonpublic economic sector witnessed rapid development in Tibet.

　　Period of stable development (1984-1991). In 1984, the second central work conference on the development of Tibet was held. The Communist Party of China (CPC) Committee and government of Tibet Autonomous Region made the decision to focus on developing a private and collective economy and supporting self-employed workers. Along with commodities produced under the united administration of the state, Tibet would let the market regulate the prices of native products. Then, Tibet’s private economy saw stable growth.

　　Period of rapid growth (1992-1999). The 14th CPC National Congress passed a decision determining that the country would develop economic sectors with public ownership as the mainstay while encouraging development of economic sectors with other forms of ownership, such as private enterprises and foreign-funded firms. Later, the 15th CPC National Congress confirmed that in the primary stage of socialism, China adopted the basic economic system with public ownership playing a dominant role and diverse forms of ownerships developing side by side. The amendments to the Constitution of China passed at the second session of the 9th National People’s Congress acknowledged the lawful status of private sectors. In 1994, the CPC Committee and government of Tibet Autonomous Region issued the Regulations on Accelerating the Development of Individual and Private Economy, which offers policy guarantees for the rapid development of nonpublic economic sectors in Tibet.

　　Period of high-speed development (1999-2011). In 1999, the CPC Committee and government of Tibet Autonomous Region formulated and issued Decision on Accelerating the Development of Nonpublic Economy and the Regulations on Investment Promotion. In 2000, after the 4th central work conference on the development of Tibet, the autonomous region decided to create fair administrative and market environments for private enterprises. In 2005, Tibet formulated Opinions on the Implementation of the State Council’s Suggestions on Encouraging and Guiding Nonpublic Sectors of Economy, which paved the road for the fast development of private economy in Tibet.

　　A great leap forward period arrived in the 12th Five-Year Plan Period (2011-2015). In 2011, the CPC Committee and government of Tibet Autonomous Region held the first conference on the development of nonpublic economy and formulated Opinions on Strengthening and Improving the Work of the Industry and Commerce Federation in the New Period, Opinions on Promoting the Great Leap Forward of Nonpublic Economy, and Medium- and Long-Term Plan for the Development of Nonpublic Economy of Tibet Autonomous Region. According to the overall guidelines formulated by Chen Quanguo, secretary of the CPC Committee of Tibet Autonomous Region, Tibet will establish at least 100 large private enterprises and double the incremental outputs and paid taxes of private market entities by the end of the 12th Five-Year Plan Period, with annual growth rate of 15 percent. Statistics show that by the end of 2013, Tibet had 128,000 private entities, with total registered capital of nearly 44 billion yuan and 634,000 employees, which contributed 91.8 percent of Tibet’s tax revenue. They play the primary role in Tibet’s foreign trade and retail consumer goods.

　　Generally, the development of Tibet’s nonpublic economy is closely related to changes of policies and eternal environments. Policy changes may generate obvious impacts on the development of the private economy.

　　II. Regional Uniqueness

　　1. Business entities of nonpublic ownership make up the bulk of Tibet’s market economy and are witnessing rapid growth.

　　In 2013, Tibet had 128,000 nonpublic entities, accounting for 95.4 percent of the autonomous region’s total market entities. Since 2010, the number of local nonpublic entities has grown annually by 37.2 percent, their registered capital by 25.7 percent, and employees by 23.6 percent. The growth speed of the nonpublic economy is much faster than that of state-owned sectors.

　　2. Private enterprises continue growing, with some becoming leaders in their respective industries.

　　Statistics show that by the end of 2013, Tibet had 70 private enterprises with annual revenues of more than 100 million yuan and 120 private enterprises with registered capital of 100 million yuan. In recent years, 1,533 private enterprises have settled in the Lhasa Economic Development Zone, Liuwu New District, and Dagze and Doilung industrial parks, which have played a lead role in local private economy, taxation, and investments. Tibet has 11 listed companies, of which eight are private enterprises. Moreover, six of seven local enterprises planning to launch IPOs in Tibet are private companies.

　　3. Local private enterprises have constantly improved their branding awareness and capacity of technological innovation.

　　Private enterprises own 53 Famous Brands of Tibet Autonomous Region and nine Famous Brands of China. Cheezheng adhesive bandage produced by Tibet Cheezheng Tibetan Medicine Co., Ltd. has been cited as a Famous Brand of China. Moreover, Tibet-produced 5100 and Mt. Qomolangmu mineral water appear at state banquets.

　　4. Private enterprises are the primary source of local tax revenue.

　　In 2010, local nonpublic economic entities paid taxes surpassing 4 billion yuan, accounting for 79 percent of Tibet’s total tax revenues. The figure reached 13.5 billion yuan in 2013 (namely, 91.8 percent of Tibet’s tax revenues that year), with an annual growth rate of 49.56 percent.

　　5. Nonpublic sectors inject vigor into transformation of development modes and adjustment of economic structure.

　　The rapid development of the nonpublic economy breaks the monopoly of state-owned enterprises in the field of investment. In 2010, private enterprises contributed 27.9 percent of Tibet’s fixed investments, and the figure surpassed 30 percent in 2013, with an annual growth rate of 21.8 percent.

　　In recent years, private economic entities have continued expanding their investment realms. So far, they have invested in diverse areas including transportation, mining, hydroelectric, real estate, Tibetan medicine, native products, and urban construction. Moreover, the funds that they used in fixed investments primarily come from their own savings and private capital, which plays an active role in optimizing Tibet’s ownership structure, investment structure, industrial structure, and corporate structure.

　　6. Nonpublic sectors play a major role in creating job opportunities, increasing local incomes, and enhancing social stability.

　　In recent years, based on their flexible, diverse business modes, local private economic entities have constantly expanded their market shares, creating tremendous numbers of job opportunities and labor demand in both rural and urban areas. In 2010, private enterprises created 208,000 jobs, and the figure reached 634,000 in 2013, with an annual growth rate of nearly 14 percent. The development of the nonpublic economy has not only made the market prosper and increased local residents’ incomes, but also enhances social stability.

　　Since China implemented the reform and opening-up policy, Tibet’s nonpublic economy has maintained rapid development, and its size has constantly increased.

　　Opportunities and Challenges

　　Since China implemented the reform and opening-up policy, the CPC Central Committee has held five conferences on the development of Tibet Autonomous Region. The 5th such meeting passed a decision to build Tibet into an important national security and ecological shelter of China, as well as a major strategic resources reserve base, a major plateau agricultural base, a protected area of unique ethnic culture of the Chinese nation, and a world-renowned tourist destination.

　　People from various ethnic groups in Tibet have endeavored to achieve a giant leap forward in economic development and social stability and promote comprehensive opening-up to the outside world. Currently, Tibet is in a fast lane of development. It faces unprecedented opportunities and showcases endless vitality.

　　I. Reform, opening-up and innovation are inevitable trends. The rapid development of Tibet depends on the growth of the private economy. In recent years, the government of Tibet Autonomous Region has formulated a series of policies and measures to encourage and support the development of private economy. For instance, it abolished and streamlined 60 percent of administrative approval procedures. Tibet formulated Opinions on Further Improvement of the Soft Environment for Economic Development and established a team in charge of investment promotion. Tibet also guarantees investors policies more favorable than other parts of China, protection of all legal interests of investors, and help investors solve problems as much as possible.

　　II. Natural conditions continue improving.

　　Tibet has vast land and pastures and abounds in forests, water, and mineral resources, thus providing favorable natural conditions for developing the nonpublic economic sector. Tibet covers more than 1.2 million square kilometers, with more than 80 million hectares of grasslands and 14.6 million hectares of forests. It is one of China’s five major pastoral regions and tops the country in timber reserves. Moreover, Tibet has 200 million kilowatts of hydroelectric resources, of which 125 million kilowatts are exploitable, ranking first in China. It also tops the country in copper reserves.

　　III. Social and economic conditions continue improving.

　　1. Solid material base. In 2013, Tibet’s GDP reached 80.2 billion yuan, per capita net income of local farmers and herders 6,520 yuan, per capita disposable income of urban residents 20,192 yuan, local government budgetary revenues 9.5 billion yuan, and total retail sales of consumer goods totaled 28.9 billion yuan, which increased by 12.5 percent, 14 percent, 11 percent, 18.6 percent and 16 percent over the previous year, respectively. Tibet’s GDP has maintained double-digit growth for 13 straight years, with an annual growth rate of 12.4 percent. Tibet has highways totaling 65,200 kilometers, comprising a complete highway network. The Qinghai-Tibet Railway has delivered 8.3 million passengers. The Lhasa-Xigaze Railway will begin operation soon, and the Lhasa-Nyingchi Railway will soon begin construction. A regional aviation network, with Lhasa Gonggar Airport at the center, radiates to seven cities in the autonomous region. Tibet’s installed power capacity totals 1.28 million kilowatts. The Qinghai-Tibet Direct-current Power Grid has begun operation, which helps boost the economic development of Tibet. All major Chinese banks, such as Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, China Development Bank, and Mingsheng Banking Corp., have set up branches in Tibet. By the end of 2013, Tibet’s balance of loans had surpassed 100 billion yuan. Local tourism also witnesses rapid growth. In 2013, Tibet received 12.9 million tourists from both home and abroad. These achievements are partly attributed to efforts of local private enterprises and their employees, which also laid a solid foundation for the healthy development of the private economy in the future.

　　2. Favorable industrial environment. Tibet has accelerated its pace to optimize its economic structure by enhancing the development of primary, secondary and tertiary industries together. Of Tibet’s Top 100 Enterprises in 2013, more than 90 percent came from tertiary industries. With enterprise reform continuing to deepen, more and more enterprise groups have emerged in Tibet. As the autonomous region’s industrial structure is further optimized, its advantageous industries represented by tourism have seen rapid development. Moreover, with the upgrade of financial services in Tibet, the local investment and financing environment has greatly improved, stimulating economic development and social progress and creating a favorable industrial environment for private economy. 

　　3. Favorable social foundation. During the 12th Five-Year Plan Period, local residents’ incomes have maintained rapid growth. Tibet continues increasing investment in sectors such as education, public health, culture, and technology. To date, the government of Tibet Autonomous Region has established a social security system that ensures all school-aged children to receive education and all patients to receive treatment. Moreover, the construction of a social security system covering both rural and urban residents has been constantly pushed forward, laying a favorable social foundation for the development of Tibet’s private economy.

　　4. Capacity of sustainable development. Tibet has great potential to develop industries such as modern agriculture and animal husbandry, mining, energy, construction, Tibetan medicine, plateau biological and green food industry, ethnic handicrafts, and tourism. Meanwhile, Tibet has strengthened regional cooperation with its neighbors including Qinghai and Gansu to the north and Sichuan and Chongqing to the east. As the Great Road to South Asia opens, Tibet will further widen its opening and become a new pole of the country’s export-oriented economy through integrating resources of eastern, central, and western China. The Lhasa State-Class Economic and Hi-tech Development Zone, Nagchu Logistics Center Bonded Area, Golmud Tibet-Qinghai Industrial Park, and China-Nepal Gyirong Port Cross-Border Economic Cooperation Zone have become important platforms to attract investments and form industrial clusters.

　　5. Inject vigor into administrative systems. Tibet has accelerated the transformation of governmental functions and increasingly improved its macro regulation system through deepening reforms of investment, taxation, finance, and circulation mechanisms. Moreover, as the state continues enhancing aid to Tibet, the autonomous region has made great achievements in attracting private investments. Tibet has further promoted economic and cultural exchange with other parts of China, which continues injecting vitality to the development of nonpublic sectors of local economy.

　　6. Stable social environment. During the 12th Five-Year Plan Period, Tibet has seen long-term social stability, which creates a preferential social environment for the development of Tibet’s private economy.

　　IV. Administrative environment continues improving. The CPC Committee and government of Tibet Autonomous Region have formulated a series of policies to create a favorable administrative environment for the rapid development of local private economy. Moreover, the central government of China also provides many preferential policies to accelerate the development of Tibet’s private economy. Particularly, the 3rd, 4th and 5th central work conferences on the development of Tibet enacted a number of policies that help Tibet achieve development by leaps and bounds. As the strategy of the development of western regions and aid for Tibet continue moving forward, a number of infrastructure projects have been launched in Tibet, expanding channels for private enterprises to join Tibet’s infrastructure construction.

　　V. Challenges remain for Tibet’s private economy. First, private sectors remain small in total size and are distributed unevenly in Tibet. Second, Tibet’s private enterprises lag behind in technological innovation. Third, Tibet’s private enterprises are weak in financing ability, and few of them are listed companies. More than 90 percent of local private enterprises have never received loans from banks. Fourth, most private enterprises are small, and their employees are poorly-educated. Fifth, private enterprises lag behind in coordinating labor relations and protecting workers’ rights and interests.

　　The government of Tibet Autonomous Region has adopted a more open attitude to serve investors. The local private economy will see a better future if all involved work together.

　　（Liao Yidong, Vice Chairman of the Federation of Industry and Commerce of Tibet Autonomous Region）