Why China needs to retain entrepreneurial spirit to ensure its future prosperity

In addition to outlining the most pressing issues facing the economy, the recent work conference also emphasised the vital role of the private sector
Entrepreneurs are needed to help China achieve common prosperity and create a bigger economic pie for the whole country

Ken Chu

Published: 2:30pm, 22 Dec 2021

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In the face of a continued global pandemic, coupled with an increasingly complex and uncertain external environment, China convened its annual central economic conference earlier this month to map out an economic plan for the coming year.

The meeting also attempted to address five crucial issues in the hope of achieving a consensus on reforming economic development.

The character for “stability” appears 25 times in the official statement issued after the conference. Stability is a high priority because China’s economy is facing tremendous pressure from shrinking demand, a supply crunch and an unclear economic outlook.

The extent and speed of support announced at the conference in a variety of areas – from fiscal and monetary policy to real estate, manufacturing and technology – to help boost the economy is unprecedented. In this way, China will seek progress with stable growth.

The Chinese economy has seen much disruption over the past year with a series of policy changes in sectors such as big tech, real estate, education and the environment. Local and central government departments have sometimes implemented conflicting policy measures because of insufficient coordination.

Precious time was lost as a consequence and long-term goals were sacrificed for short-term gains. Under such circumstances, the masses bore the brunt of the disruptions as risks increased significantly.

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To overcome these challenges, officials at the conference said the country needs to have a clear understanding of and firm grip on five critical issues. They are common prosperity; regulating the use of capital; safeguarding the demand and supply of primary goods; preventing and resolving major risks; and, managing emissions to attain carbon neutrality.

This is not just about putting theories into practice; achieving the goals is also of strategic significance. Officials at the conference discussed these issues at length because the central government sees a need to address market concerns and unify the thinking of central and local departments.

Earlier this year, Vice-Premier Liu He sought to reassure entrepreneurs and the private sector amid the series of regulatory crackdowns.

Some people might hesitate to embrace entrepreneurship, even though it is a key element in the development of socialism and productivity. Certainly, such reassurances do not mean endorsing unethical ways of doing business. Hopefully, society will understand the essence of entrepreneurship from a strategic standpoint.

Liu also called on the country to respect entrepreneurs in the same way scientists are respected, and reward them accordingly so a new class of entrepreneurs can grow domestically. He said investors who had the ability to detect risks, raise capital and restructure shareholdings should also be regarded as entrepreneurs.

The growing rivalry between the United States and China has made the policy recommendations coming out of the conference even more vital. China cannot afford to see its economy slow, or productivity and innovation drop if it hopes to manage a prolonged conflict.

Entrepreneurs can help the economy be more resilient by identifying business opportunities and stimulating growth, but they are a fragile, endangered species facing tremendous pressure.

Achieving common prosperity is part of China’s grand scheme, but entrepreneurs are needed to help create a bigger economic pie for all the country to enjoy. So, entrepreneurs need to be patriotic and shoulder more social responsibility.

All told, the central economic conference laid down a solid policy foundation for stable growth next year while providing a theoretical and ideological basis for the future of the Chinese economy. As well as being the world’s second-largest economy, China remains an important global growth engine.

At a virtual summit with Southeast Asian leaders on November 22, President Xi Jinping announced the upgrading of China’s ties with the Association of Southeast Asian Nations to a comprehensive strategic partnership. Building on the fact that Asean and China are major trading partners, Xi said a better China means a better world.

Entrepreneurs can take heart from the conference and embrace the positive signals on the economy to take advantage of the well-established domestic and international trading platforms to seek business opportunities.

Businesses will maintain their key role in China’s “dual circulation” economic strategy, and a thriving entrepreneurial spirit will continue to bring immense benefits to society.

Ken Chu is group chairman and CEO of Mission Hills Group and a national committee member of the Chinese People’s Political Consultative Conference

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