Although developing private capital has long been one of China's national policy objectives, the government and financial authorities still have yet to begin the serious work of dismantling the administrative obstacles that exist in front of industries monopolized by the State.

Take China's railway and banking industries as prime examples. Private capital has only a 2.1 percent share in the country's rail industry, while the Ministry of Railways controls the rest. Meanwhile, private investors have only carved out a meager foothold in the country's smallest banks. Their small position within these largely State-dominated industries keeps private capital holders' influence weak and their profits small.

As China's economy slows, the government should allow more private money to flow into the industries that have long been controlled by State-owned companies. Not only will this take some of the financial burden off the government when it comes to funding capital-intensive enterprises, but profit-oriented investors can help the country's pillar industries improve management.

The author is Wang Xiaoguang, a researcher with the Chinese Academy of Governance.