China’s new private-firms bureau reveals 6 service platforms to support its struggling ‘family’
- It remains to be seen how much power the two-month-old division will wield as it aims to ‘serve the development and growth’ of China’s private sector
- Fewer restrictions, coupled with a pro-business shift in tone among policymakers, have failed to counteract the nation’s sluggish economic recovery and ongoing property crisis
Two months after a special division within the nation’s top economic planner was set up to help piece together the shattered confidence of China’s private sector, the head of the new department has pledged to solve the problems that private enterprises are facing.
But economists say questions remain as to how much power the agency can wield, and they contend that much stronger signals are still needed from Beijing to offset the lingering impacts of suppressive policies in the past few years.
Wei Dong, who runs the bureau tasked with developing the private economy, under the oversight of the National Development and Reform Commission (NDRC), said the country will step up policy support and provide better service to the private sector, according to Xinhua.
“It is our founding mission to serve the development and growth of the private sector wholeheartedly,” Wei said on Monday during a China Economic Roundtable programme hosted by the news agency. “The bureau and private enterprises belong to one family.”
There are still some difficulties and challenges facing the development of the private economy that need to be solved in the next step of work
In particular, six major service platforms will be set up to help private firms. The individual platforms will review the effectiveness of supportive policies; address policy implementation; solicit advice from the sector; facilitate international exchanges; monitor development status; and enhance publicity, according to Wei.
The bureau has already taken concrete measures since its establishment in September, Wei said. For example, it has put local government support for the private sector onto the list of matters to be annually reviewed by the State Council, to give local authorities more motivation to aid the ailing sector.
“There are still some difficulties and challenges facing the development of the private economy that need to be solved in the next step of work,” Wei said, adding that since China’s economy is still in a stage of restorative growth amid a weak global recovery, boosting confidence in the private sector will take time.
“China’s economy will continue to improve in the long run, and the private economy, a major force in China’s modernisation drive, will also enjoy long-term positive momentum,” Wei said.
A pillar of China’s economy, the private sector contributes more than half of the country’s tax revenue, 60 per cent of gross domestic product, 70 per cent of technological innovation, and more than 80 per cent of urban employment, according to official figures.
The sector was hit hard by Beijing’s regulatory crackdowns in recent years, including on real estate and technology, which came amid a restrictive zero-Covid pandemic policy.
But a lifting of some restrictions, coupled with a pro-business shift in tone among policymakers, has failed to counteract the nation’s sluggish economic recovery and ongoing property crisis.
In the first three quarters of 2023, fixed-asset investment from private firms fell by 0.6 per cent, year on year. The decline was mostly driven by a slump in real estate investment, which usually accounts for one-third of all investment from the private sector, official figures show.
China vows private firms, like state firms, will be ‘bigger, better, stronger’
But the actual progress on this front has been disappointing, and confidence among investors and entrepreneurs remains low, as the regulatory crackdowns in recent years still haunt them, said Larry Hu, chief China economist at Macquarie.
“Policymakers need to be bolder if they want to rekindle the animal spirit in Chinese society,” Hu said.
“Two areas are particularly important: sending out stronger signals to the private sector, and making the recovery stronger and more sustainable.”
