China’s private entrepreneurs are becoming more confident in their pursuit of high-quality development, fueled by increasing orders, stronger competitiveness, and an improving business environment. The recovery of private companies and the positive sentiment of private entrepreneurs are vital to sustaining China’s economic expansion, as the private sector has been a crucial pillar of growth.
Experts and the media often use the numbers 50, 60, 70, and 80 to illustrate the private sector’s significant contributions to China’s economy. The private sector accounts for approximately 50 percent of the country’s tax revenue, 60 percent of its GDP, 70 percent of its technological innovation, and 80 percent of its urban employment.
The private sector’s optimism about its development prospects is in line with China’s robust growth momentum in the first quarter of this year.
Since the beginning of 2023, Wang Xincheng, chairman of Changjiang Electric, has been busy with visiting clients, negotiating orders, and attending exhibitions. Changjiang Electric, which specializes in intelligent energy construction and services, recorded total orders worth 810 million yuan (about 117 million U.S. dollars) in January, with a year-on-year growth of 15 percent in the first quarter. “New orders continue to come in, and the growth momentum is good,” Wang said, adding that the company is operating at full capacity.
Changjiang Electric’s experience mirrors the overall recovery of China’s economy, the world’s second-largest. In the first quarter, China’s economy grew by 4.5 percent, surpassing expectations, with factory output and household consumption rebounding. Notably, the private sector in China exhibited a significant recovery. Despite weak global growth, the foreign trade of China’s private firms increased by 14.4 percent in the first quarter, accounting for 52.4 percent of the country’s total.
The Small and Medium Enterprises Development Index, which surveyed 3,000 small and medium-sized enterprises in China, rose to 89.3 in the first quarter of 2023, up from 88 in the previous quarter. The index’s sub-indexes for all eight major sectors, including construction, transport, and accommodation and catering, showed a positive trend.
“The overall economy is recovering, and the central and local governments have shown strong support for the private sector’s development,” said Wu Xiaoquan, COO of Nanjing TICA Climate Solutions Co., Ltd. “We are confident in our future.” TICA’s business performance increased by 10 to 15 percent in the first quarter of this year, with significant growth in orders for industrial manufacturing projects and overseas markets.
Private entrepreneurs in China are increasingly confident in pursuing high-quality development, supported by new orders, enhanced competitiveness, and an improving business environment. Private companies are crucial for China’s economic expansion, contributing approximately 50 percent of tax revenue, 60 percent of GDP, 70 percent of technological innovation, and accounting for 80 percent of urban employment. The first quarter of 2023 has seen a revival of private companies, and economic experts and media outlets describe the sector’s contributions to the economy using the numbers 50, 60, 70, and 80.
Despite challenges such as rising costs, difficulties in financing and recruitment, and weak global demand, China’s private entrepreneurs are doubling down on their efforts in research and development (R&D) to explore new materials and energy. For example, Jiangsu Hengli Chemical Fiber Co., Ltd. is focusing on R&D efforts to tap into new materials and new energy, while Shenghong Group is accelerating its presence in the emerging new energy, new materials, and green and low-carbon development sectors. Wuhan Jingce Electronic Group Co., Ltd. has more than doubled its R&D spending, leading to the rollout of high-end testing equipment and three years of revenue growth for the company.
In addition to policy support, the business environment for private enterprises in China has also improved. In the World Bank’s “Doing Business 2023” report, China ranked 31st globally in the ease of doing business, up from 78th in 2017.
China has been streamlining administrative procedures, optimizing business environment and strengthening intellectual property protection to further stimulate the vitality and creativity of market entities, especially private enterprises.
According to the State Council’s executive meeting in April, a series of measures will be taken to facilitate market access, improve the business environment and enhance the vitality of market entities.
Specifically, the meeting called for the creation of a more convenient, transparent and efficient market access system for private enterprises, simplification of administrative procedures, improvement of intellectual property protection, and establishment of an enterprise service platform to offer one-stop services for private enterprises.
All these measures aim to provide a more favorable business environment for private enterprises, so that they can focus on innovation and development, and further unleash their potential.
It’s encouraging to see that many localities in China are introducing policies and measures to support the private sector in fields such as financing, talent, technology, and land use. These efforts are expected to boost the confidence of private enterprises in their development, which is crucial for the healthy growth of the economy.
Private firms should also take the initiative to pursue high-quality development and improve their competitiveness through self-reform, development, and business compliance. By working together, all parties can help ease the pressures and burdens of private firms, enabling entrepreneurs to feel more relaxed and aim higher.
As a result of these efforts, private entrepreneurs are becoming more confident, energetic, and ambitious. Companies such as Suzhou Taihu Snow Silk Co., Ltd. have embraced new opportunities and adapted to the changing market conditions by expanding their sales through online livestreaming and attracting more offline customers by opening new outlets at popular online sites.
Overall, the market situation has been improving since the beginning of the year, and with the support of the government’s policies, private enterprises are expected to continue their positive momentum.