BEIJING, Oct. 19 (Xinhua) -- Chinese Vice Premier Liu He said Friday that state-owned enterprises (SOEs) are in an interdependent relationship with private enterprises, where there is mutual support and cooperation.

The discussions about the so-called "Guo Jin Min Tui," the Chinese phrase describing a situation where state firms force a retreat of the private sector, are "one-sided" and "wrong," he said in an interview with Chinese reporters.

Recently, state-owned banks or enterprises are helping and even restructuring private firms which are in liquidity crunch after expanding too fast at the costs of excessive debts and deviating from their main business. "I believe this is a good thing, not 'Guo Jin Min Tui'," he said.

State-owned enterprises, most of which are in the upstream of the industry chain, play roles in basic industries and heavy manufacturing, while private enterprises are more involved in providing manufacturing products, especially final consumption goods, said Liu.

"The two are highly complementary to each other with mutual cooperation and support. In the future, the Chinese economy will continuously upgrade in this direction to high-quality development," said Liu.

If private enterprises are in a good business condition, state-owned capital can withdraw, and SOEs can increase efficiency by enlisting the participation of private enterprises when facing difficulties, said the vice premier.

"We also encourage qualified private enterprises to conduct merger and acquisitions of small and medium-sized enterprises in the same industry with competitive potential but confronted with difficulties," said Liu.

Liu stressed that the Chinese government will create an equal environment, intensify the rule of law, strengthen property rights and intellectual property protection, stick to the basic economic system and deepen reform and opening-up.

"We have no reason not to have full confidence in the broad prospect of China's economic development," said Liu.