Last year，the CPC Central Committee decided to make expansion of domestic demand as the basic foothold and long-term strategy for promoting the continuous，rapid and sound development of national economy in response to the changes of domestic and foreign economic environment. Proactive fiscal policy was adopted，investment was increased and infrastructure construction was enhanced，with sound effect achieved. In order to keep the sound momentum of fast national economy development，it is necessary to enhance the expansion of domestic demand，guide non-state-owned economic sectors to increase investment，activate market and start up consumption demand.

Government investment can only play a preliminary role and the enthusiasm of all walks of life should be mobilized and the investment of social capital should be increased to keep the driving force of investment to economic growth. Among the investment in infrastructure construction，State budget investment only accounts for about 1/30. In last year，proactive policy was adopted and the long-term treasury bond of RMB 100 billion was additionally issued to enhance infrastructure construction. The increased investment of RMB 100 billion only accounted for 3.5% of the total fixed assets investment of the whole society（RMB 2845.7 billion）. In contrast，the investment of non-state-owned economic sectors accounted for 45% of the fixed assets investment of the whole society. In particular，the treasury bond of RMB 100 billion used for enhancing infrastructure construction will be almost run out of in the first half of the year according to plan. If private capital is not fully mobilized to increase investment in the latter half of the year，the fixed assets investment growth of the whole society may witness substantial decline. Without the robust driving force for fast investment growth，we may hardly maintain the sound momentum of economic growth rebound and the economic growth rate may decline in the latter half of the year. In addition，the implementation of proactive fiscal policy and the increase of fiscal expenditure should be conducted properly at proper time and the acceptance ability of the finance should be taken into full consideration. In the long term，the emphasis should be laid on stimulating social investment by the guidance on government investment projects. Under social investment，enterprises and individuals can make decisions independently and bear investment risks by themselves，exerting no fiscal burden on government. Moreover，enterprises and individuals have better knowledge about market and the economic benefits of investment projects are comparatively high. Therefore，increasing social investment can enhance investors’ expectation on investment return，promote the growth of consumption demand and form the sound cycle of investment and consumption.

At present，the bleak investment by non-state-owned economic sectors should attract great attention. Since the reform and opening-up，the investment by non-state-owned economic sectors has been increasing fast. During 1980 to 1997，the annual average growth rate reached 28.6%，among which the annual average growth rate of the investment by collective economy reached 29.8%，up 10.2% and 11.4% respectively in comparison with that of the investment by state-owned organizations. The investment by non-state-owned organizations drove the fast growth of non-state-owned economy，which played an important role in supporting the fast growth of national economy. Non-state-owned economy has contributed about 70% share to the added value of GDP during the past two decades since the reform and opening-up，and has become the most active part in national economy. However，the growth of the investment by non-state-owned economy declined significantly. In 1998，the growth rate was only 8.0%，and that of the investment by collective economy declined by 3.5%. In the first quarter of this year，the investment by collective economy，individuals and other non-state-owned organizations still grew at low speed.

It is necessary to adopt effective measures to create conditions for increasing social investment.

Firstly，it is necessary to emancipate thoughts and create equal system and policy environment. In addition，it is necessary to implement fair tax. While formulating tax preferential policy，non-state-owned economy should be treated fairly based on industries and the differential treatment for different ownerships should be eliminated gradually. Land management authorities should handle well the land for the investment by non-state-owned economy according to relevant regulations on state-owned and collective land use right grant，transfer and lease and the charges on non-state-owned economy related to land should be treated equally with that on state-owned economy.

Secondly，it is necessary to enhance positive publicity and reinforce investors’ confidence. While enhancing positive publicity and the guidance of public opinions and helping non-state-owned investors to overcome negative attitude，efforts should be made to implement the policies and measures of expanding domestic demand and promoting economic growth，maintaining economic prosperity and stability and creating favorable investment atmosphere.

Thirdly，efforts should be made to relax the control over market access conditions and broaden the investment fields for non-state-owned economy. Non-state-owned economy should be guided and promoted to invest in fundamental industries，pillar industries and hi-tech industries according to industry planning and the policies on structure adjustment. Non-state-owned economy should be encouraged to invest in and operate urban service industry，urban infrastructure，utilities and supporting projects for the production of large and medium enterprises. Road，bridge，water supply，power station and other public utility investment fields that can generate steady income should be open properly to attract non-state-owned economy investment by cooperation，joint operation，equity participation，BOT and other flexible means. Non-state-owned economy should be encouraged to invest in hi-tech industries. The information about recognized hi-tech industry projects should be provided to non-state-owned economy in time and non-state-owned economy should be treated equally with state-owned economy in terms of granting the loan for scientific & technological development and technical transformation，direct financing in capital market，fiscal support，import，talent introduction，undertaking scientific research projects，applying for scientific achievements certification，participating in government award selection，recognizing the qualification of technical enterprises and other aspects so as to promote non-state-owned economy to invest in hi-tech fields and accelerate hi-tech achievements transformation.

Fourthly，efforts should be made to provide smooth financing channels and increase financial services. Non-state-owned economy is characterized by small operation scale，small loan quota and frequent loan demand. And it is difficult for non-state-owned economy to get financial services from large banks. Thus，it should be made clear as soon as possible that，rural credit cooperatives，urban credit cooperatives，urban cooperative banks and urban commercial banks being established are the main channels for small and medium enterprises，including township enterprises，to get financial services. If the channels above cannot provide enough support for non-state-owned economy development，other national commercial banks，especially state-owned commercial banks，should also provide necessary services to non-state-owned economy by establishing the department specializing in providing services to small and medium enterprises，establishing more service windows in small and medium cities and simplifying relevant examination and approval procedures. Proper loan application conditions and examination & approval procedures should be set up for non-state-owned economy according to its actual situation，and it is prohibited to refuse to grant loan to the enterprises that have sound financial strength and marketable products because of scale or ownership；The requirements on mortgage or guarantee may be relaxed properly for the enterprises that have low liability ratio，products with high technical content，market potential and stringent internal management；credit line should be raised for profit-making non-state-owned enterprises and promising private hi-tech enterprises. Qualified non-state-owned enterprises that are in key national support industries or have the key national support products may be recommended to get listed or issue bonds. A dedicated direct financing market may be established for the non-state-owned enterprises having small scale but huge market potential by referring to the experience of NASDAQ system（National Association of Securities Dealers Automated Quotation）in establishing small capital market.

Fifthly，efforts should be made to establish the credit guarantee system supporting the investment of non-state-owned economy and encourage the establishment of venture capital fund. Policy-based loan guarantee institutes should be established by fiscal allotment to provide guarantee for the loan application of non-state-owned small and medium enterprises by referring to the experience of foreign governments in supporting and assisting the development of small and medium enterprises. Financial discount mechanism should be established to provide discount loan for the non-state-owned small and medium enterprises that have marketable products and state-of-the-art technologies. The venture capital fund and venture fund catering for small and medium enterprises should be established by setting up private hi-tech enterprise loan risk fund to provide capital guarantee to non-state-owned economy for its investment in hi-tech industries and emerging industries.

Sixthly，efforts should be made to establish the organizations coaching the development of small and medium enterprises and enhance information service. The experience of the US and Taiwan should be referred to in establishing the organizations coaching the development of small and medium enterprises. The experts and scholars in industry，government and academic circle should be invited to form coaching team to give lectures at the management talent training classes organized by the institutes above according to industry characteristics and requirements so as to improve management ability. The government support system for non-state-owned economy investment should be established and improved，industry guidance information should be released to the society on a regular basis and the list of the industries and products on which investment is encouraged，restricted or prohibited should be formulated to help non-state-owned economy to know the current situation and prospect of economic development and provide project selection，application and market demand information services to non-state-owned economy for its investment. Intermediary service organizations should be established and improved to provide law，accounting，finance，consultation，training and other services to the investment of non-state-owned economy.