Government-enterprise cooperation contributes to Wuxi's reform and opening-up

Huaxi village, located in Jiangyin city, Wuxi, Jiangsu province, has been called the top village in the country. It is also a name card of Wuxi, known for its success in opening up and realizing common prosperity.

The name "Huaxi" is well-known for it is not only famous as one of the richest villages in China, and also brings to mind the Jiangsu Huaxi Group Corp, a company specialized in diversified operations with total assets of over 50 billion yuan ($7.32 billion).

Steel and chemical fibers used to be two of the group's primary focuses. Wu Xie'en, the son of Huaxi village's former Party secretary Wu Renbao, was elected as the village's new Party secretary as well as the president of Huaxi Group in 2003. Since then Wu has been striving to reshape the group's economic structure, upgrading the industry-dominant economy toward a modern service industry-led model.

Wu was confident about the transformation as he saw the trending changes in China's economy.

Firstly, with the adjustment of economic structure, large companies had to change to survive. "Expanding production of traditional industries will result in the increase of land prices and environment pollution. Developing new industries can hedge risks during the economic downturn," said Wu, who also served as a representative of both the 18th and 19th national congresses of the Communist Party of China.

Second, giant companies will gain high-quality and essential production factors, including capital and talent. Earlier the group had faced increasing difficulties for it was burdened by too much debt. According to statistics, Huaxi group's debt-asset ratio reached 69.4 percent by the end of September in 2017.

Wu treated moderate liability operations as an ideal way to optimize the distribution of resources and improve the Return on Equity (ROE) rate. In fact, a high liability ratio is not unusual for big enterprises. China Resources Group, one of the key state-owned enterprises in China, had an over 70 percent liability ratio in 2012.

Third, China's economic transformation provides large companies with opportunities to tap into the global market. Currently, Huaxi group enjoys a booming investment business, having set up an investment fund on high technology in Stanford University and invested in two mines in Mozambique. One Huaxi-invested chip companies now ranks among China's top 20 innovative companies.

"Huaxi pays great attention to investment security. For example, we are not deeply involved in the P2P business," Wu added.

Apart from Wu Xie'en, a number of company leaders born in the 1960s have become the backbone of Wuxi's economic growth, including Zhou Haijiang, CEO of Hodo Group and Zhou Jianping, chairman of Heilan Group.

One of Wuxi's achievements in opening-up has been the growth of entrepreneurs. Compared with the factory directors and company leaders at the early stage of reform and opening-up, the new-generation of enterprise heads highlight their global vision and set a fast pace to keep up with the country's economic rise and the trend of economic globalization.

The Cambodian Sihanoukville Special Economy Zone (SSEZ), led by the Hodo Group, has become the largest base for foreign-trade exports in Cambodia, regarded as the "Shenzhen of Cambodia".

The Wuxi government has always encouraged entrepreneurial innovation. The city's successful economic development is partly attributed to the combination of government and companies. Instead of interest-bundling, the Wuxi government has been focusing on long-term interest, supporting entrepreneurs in investment, management and technology innovation.

The local government has also stepped up efforts to boost innovation of public services such as joint stock reform, which has stimulated booming strategic industries, including internet of things and integrated circuits (IC).

Government authorities attach great importance to the key role of entrepreneurs. In 2015, Wuxi experienced slow economic development due to economic restructuring.

Li Xiaomin, Party secretary of Wuxi, at an entrepreneur forum that year, stressing the important role of companies and entrepreneurs in economic development. He vowed to offer accurate support to companies based on industries and classification, to facilitate companies' growth. The government will also stick to creating a business-friendly environment, helping companies with key problems of fund raising and employment.

In terms of the relationship between government and the market, Wuxi's acting mayor Huang Qin noted that the market has been playing a dominant role in economic development and said the government will exert its influence and guide the development of industries, especially the high-tech and strategic industries such as IC.

The 40 years of Wuxi's reform is seen as a history of ideological emancipation, guidance and protection of entrepreneurial innovation. The Wuxi government's efforts have provided a reliable support system for local economic resurgence and common prosperity.

Wuxi has seen successful transformation of its economic structure in recent years, especially in the development of strategic industries, which is largely credited to the government's insistence on the principle of giving the market a crucial role in resource allocation and better exerting the government's influence. The city's experience will become the spiritual wealth of China's reform and opening-up policy.