Regions

China will open up its public utilities to private investment as part of the current privatisation drive to bolster economic growth, the official Xinhua news agency said on Thursday, citing the Ministry of Housing and Urban-Rural Development.

China has launched its boldest reform since joining the World Trade Organisation to allow private investment in sectors dominated by state-owned firms, including railways, hospitals, power generation and energy transmission.

"When allowing private investment in public utilities, we should treat it as equally as other investment bodies and without additional conditions," the official Xinhua News agency quoted a circular released by the ministry as saying.

Private investment will be allowed into urban roads, bridges, rail transport, car parks as well as gas and heating supply, sewage treatment and garbage disposal projects, the ministry said.

Private businesses could enter the previously state-dominated sectors via direct investment, joint ventures or acquisitions.

But public utility costs will continue to be regulated by the government, said the ministry.

Private firms will be encouraged to invest in public utilities by buying bonds and stocks issued by local governments.

China's new push to open state controlled industries may look bold but private investors are sceptical - it may face resistance from state firms.

China's insurance regulator also vowed separately to let more private investment into the industry on Thursday by saying any single investor could buy stakes of over 20 percent if appropriate, without giving further details.

Chinese insurers are generally short of cash. Standard & Poor's has said Chinese insurers will need more than 100 billion yuan ($15.7 billion) of external funding to fund their rapid development in the next three years.

China's Ping An Insurance, the world's second-largest life insurer by market value, said late last year it would raise up to 26 billion yuan by selling convertible bonds, just nine months after raising $2.5 billion through a private placement in Hong Kong.

China Life Insurance and other Chinese insurers have also raised capital in the past year. ($1 = 6.3599 Chinese yuan)

This article is copyrighted by Reuters