In a bid to enhance confidence and address concerns of private enterprises, the heads of several central government departments in China have recently conducted a series of meetings with more than 67 domestic and international private firms. These meetings, held within a span of 10 days this month, aim to demonstrate unwavering support for private enterprises and stimulate sustainable development in the face of downward economic pressure.
Liu Shangxi, the president of the Chinese Academy of Fiscal Sciences, emphasized the need to provide a “long-acting reassurance pill” to private companies in order to stabilize market expectations. Private investment has experienced negative growth in recent months, and bolstering the confidence of these critical drivers of economic growth is essential.
According to the National Bureau of Statistics, private investment saw a 0.1 percent year-on-year decline from January to May, while the total profit of major private enterprises dropped by 21.3 percent compared to the previous year. Liu Shangxi warned that if the private economy further shrinks, it may accelerate the overall downturn of the national economy. Therefore, regulatory policies must be adjusted to instill certainty and support private enterprises.
Private enterprises have played a crucial role in driving innovative development, contributing approximately 50 percent of tax revenue, 60 percent of GDP, and 70 percent of technological innovation in China. In July, various ministries and ministry-level bodies, including the National Development and Reform Commission, the Ministry of Commerce, the Ministry of Industry and Information Technology, and the Ministry of Science and Technology, have conducted meetings with private enterprises to discuss their operational conditions, challenges, macroeconomic policies, and suggestions for future development.
The State Administration for Market Regulation has disclosed plans to hold a meeting with 10 small and medium-sized enterprises or individually owned businesses to address their operational difficulties. These intensive meetings reflect the Chinese government’s commitment to establishing a normalized communication mechanism with private enterprises and providing tangible support.
Zhu Keli, the founding director of the China Institute of New Economy, views these meetings as a response to downward economic pressure and expects them to greatly enhance the investment confidence of private enterprises. By understanding the real demands and concerns of private enterprises, the government can develop targeted policies that effectively address their needs.
The number of registered private enterprises in China surpassed 50.93 million by the end of May, constituting 92.4 percent of the country’s total number of companies, up from 79.4 percent previously. These efforts by the Chinese government to engage with private firms resemble previous practices, where meetings or symposiums are held with industry experts and company executives to discuss the economic situation. These initiatives, including meetings chaired by President Xi Jinping, have historically played a significant role in stabilizing market expectations.
Notably, the manufacturing, consumption, and information technology sectors have received major focus during the meetings with ministries and regulators this month.