China will soon roll out a series of policy measures to support more private investment and boost private enterprises as part of a package of measures to bolster corporate confidence and revive the economic recovery, the National Development and Reform Commission (NDRC) announced, a day after China issued a top-level document for promoting the development of the private sector. The document details 31 measures such as supporting private enterprises’ access to funding, reducing market entry barriers and promoting fair competition. The document called private companies “fresh troops in pushing forward China’s modernization”, emphasizing their strategic importance in China’s future growth. Private entrepreneurs including Tencent's Pony Ma and Xiaomi's Lei Jun welcomed the plan. Ma said in an article on the CCTV website that the measures were clear and “highly targeted”, and that they “have stabilized expectations for realizing high-quality development”. Fixed asset investment (FAI) by private firms fell 0.2% in 2022 from the previous year, compared to the rise of 8.1% among state-owned enterprises (SOEs). The profits of private industrial enterprises with an annual revenue of at least CNY20 million fell by 21.3% in the first five months of the year, compared with a drop of 17.7% for SOEs.
Li Chunlin, Deputy Director of the NDRC, said the Commission will work with relevant parties to introduce supportive measures to implement the recently announced guidance, and two documents will be released soon to promote the development of the private sector and boost private investment. Li said that the document for supporting more private investment will focus on key areas, improve the mechanism for ensuring the provision of factors of production, and incentivize the private sector to increase investment. He added that the two documents will be part of the country’s efforts to build a “1+N” policy system for supporting private businesses, in which “1” is the recently announced top-level guidance and “N” is the detailed plan for various sectors.
Private firms, a key driving force behind China’s economic ascent during the past decades, contribute more than 60% of gross domestic product (GDP), 80% of urban employment and 90% of market entities. Li said the private sector is playing a key role in shoring up growth and boosting trade, and it also serves as “a vital force in advancing Chinese modernization”. To fully implement the steps mapped out by the guidance, the NDRC will make more efforts to continuously remove policy measures hindering the construction of a unified national market and fair competition, as well as resolve problems related to market entry. For instance, Li said the country will roll out an updated negative list for market access and formulate regulations on fair competition review in a bid to create a better development environment for the private sector. The NDRC held three symposiums in July to address private enterprises’ concerns and support their sustainable development. The NDRC will regularly hold symposiums with private businesspeople to listen to their thoughts, address their specific concerns, and assess the implementation of current policies.
Vice Minister of Industry and Information Technology Xu Xiaolan highlighted the key role of micro, small and medium-sized enterprises in boosting innovation, saying the Ministry is studying and formulating policy measures to promote the high-quality development of specialized and sophisticated SMEs.
China’s latest guidance to promote the development of the private sector will boost confidence among private enterprises, allowing them to make more innovations and stimulate market vitality for greater economic growth, according to private company executives and industry experts. The document promoting the private economy encourages entrepreneurs to look to the “Jinjiang experience” to actively explore innovation. Jinjiang in Fujian province has transformed itself from an economically struggling city into a top manufacturing base with a well-developed private economy, creating the “Jinjiang experience”. Lin Xiaofa, Chairman of smart kitchen and bathroom products maker Jomoo Group, said that he is proud of being an entrepreneur and looks forward to the future development of the private sector. Lin said that Jomoo focuses on technological innovation, and has devoted itself to making bathroom products for more than 30 years. “With the guidance, we are inspired to focus on the real economy and continuously improve our technological innovation capabilities so as to realize high-quality development,” he added.
The guidance also said that more efforts will be made to support private companies in expanding their overseas business and engaging in overseas projects in an orderly manner. The country will support private enterprises to boost their competitiveness on the global stage and beef up their presence in the design and development of core components and high-end manufactured goods, it said. According to the latest data from the State Administration for Market Regulation (SAMR), the number of registered private enterprises exceeded 50.93 million by the end of May, and there are also more than 100 million self-employed businesses. This overview is based on reports by the China Daily, Global Times and South China Morning Post.
