The National Development and Reform Commission (NDRC) has endorsed projects by 10 Chinese internet firms, including Alibaba, Tencent and Meituan, marking the official end of a two-and-a-half-year investigation into platform companies. Alibaba, Tencent and Meituan have all received hefty fines and undergone heavy business restructuring since October 2020 as part of Beijing’s regulatory crackdown. The top economic planner also published guidelines for China’s so-called “green-light projects”, where private internet firms can invest and receive government backing to boost the development of the real economy and to shore up economic growth.
“While obtaining rich returns and improving their core competitiveness through their investments, platform companies have also contributed to technological self-reliance, the real economy and the country’s high-quality development,” the NDRC said in a statement on its official WeChat account. The statement marked an official recognition of the private sector’s contribution to technological advancement, as well as national economic growth. “For the next step, the NDRC will release typical investment cases for platform companies and support them to play a more active role in economic development, job creation and international competition,” the NDRC added. The results of the NDRC investigation were released after a nationwide fact-finding campaign, which has since March sought to tackle China’s deep-rooted problems, from faltering private confidence to major hindrances to foreign direct investment and social issues, including unemployment, an aging population and medical services.
“This clarifies what the rules are for investment expansion, and it is also conveying an important signal to the private sector and to the market that the regulation has become clearer and looser,” said Zhao Xijun, Finance Professor at Renmin University in Beijing. “It means that the previous capital overhaul has been put in place, and this is also in response to the current downward economic environment.” The projects highlighted by the NDRC are, according to Zhao, choke points for China’s economy, meaning they require increased efforts to ensure sustainable growth. The NDRC also found that the top 10 platform companies, as measured by their market capitalization, increased their investment in chips, self-driving technology, new energy and agriculture in the first quarter, rising by 15.6 percentage points from the previous quarter.
U.S. technology curbs also remain despite the resumption of bilateral talks with the recent visit to China by U.S. Secretary of State Antony Blinken, Treasury Secretary Janet Yellen and the ongoing visit of special climate change envoy, John Kerry, the South China Morning Post reports.
The heads of several central government departments have presided over at least six meetings in 10 days with more than 67 private enterprises from home and abroad to address the companies’ concerns and support their sustainable development. The meetings have sent strong signals that the country will make further efforts to support private enterprises and the economy, which industry experts said is expected to boost market confidence and stimulate economic growth in the second half of the year, given the downward domestic economic pressure. Liu Shangxi, President of the Chinese Academy of Fiscal Sciences, said that the economic recovery was weaker than expected in the first half, and that to stabilize market expectations, a “long-acting reassurance pill” must be given to private companies, the China Daily adds. Noting that private investment has experienced negative growth in past months, he emphasized that the confidence of private enterprises, which are critical drivers of the country’s economic growth, must be bolstered. According to the National Bureau of Statistics (NBS), from January to May, private investment fell by 0.1% year-on-year, and the total profit of major private enterprises dropped 21.3% year-on-year.
The private economy has also been a driver of the nation’s innovative development. Private enterprises contribute about 50% of the country’s tax revenue, 60% of GDP and 70% of technological innovation. Since the beginning of July, a group of ministries or ministry-level bodies, including the National Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM), the Ministry of Industry and Information Technology (MIIT) and the Ministry of Science and Technology (MST), have held meetings with private enterprises. The NDRC held two such meetings within seven days. The focus was mainly on current operational conditions and bottlenecks faced by private enterprises, their views on macro-economic policies, and their suggestions on future development and policy support. Zhu Keli, Director of the China Institute of New Economy, said that the intensive meetings with private enterprises showed that the government is building a normalized communication mechanism between government and companies, and is taking real measures to support private companies, the China Daily adds.
