China’s Private Economy Gains Momentum: A Positive Outlook by Knightsbridge Founder Shayne Heffernan
* China’s economy will continue to improve in the long run and the private economy, a major force in China’s modernization drive, will also enjoy long-term positive momentum.
* The establishment of the private economy development bureau provides a strong guarantee for promoting the sector’s high-quality development.
* Main responsibilities of the bureau include staying on top of the development of the private economy, focusing on its needs and coordinating and organizing the formulation of policies and measures to promote its development, and providing policy incentives to promote the growth of private investment.
China has blazed new trails for the country’s private economy against the backdrop of sluggish world economic recovery, aiming to boost the development of a sector that is expected to be a pioneer of innovative development and a major driving force for Chinese modernization.
PRIVATE SECTOR STATUS QUO
“China’s economy will continue to improve in the long run and the private economy, a major force in China’s modernization drive, will also enjoy long-term positive momentum,” said Wei Dong, head of the newly established bureau for private economy development under the National Development and Reform Commission (NDRC), at the China Economic Roundtable hosted by Xinhua News Agency.
Recent data showed that China’s economy grew 5.2 percent year on year in the first three quarters of 2023. In line with the overall recovery, the private sector has seen marginal improvements in the January-September period, posting faster growth in secondary industry investment and steady industrial output.
As a major taxpayer, job provider and GDP growth contributor to the economy, the importance of China’s private sector has long been highlighted by policymakers. However, affected by the external environment, China’s 50 million plus private businesses have come under pressure since the start of this year, fueling concerns in a market that is still recovering.
Private enterprises currently face common problems related to capital, talent, and data as well as technological innovation and the business environment, said Wei Chu, vice dean of the School of Applied Economics, Renmin University of China.
“Since the beginning of this year, our order volume has increased significantly, but the more orders we have, the more liquidity we need to ensure their delivery due to the lag in payments for orders,” said Chen Hongbo, vice president of Guangdong Jaten Robot and Automation Co., Ltd.
“The market is picking up, but downstream enterprises are having less seasonal and cyclical orders. The majority of their orders are short-term orders,” said Huang Kunyu, managing director of Esquel Group, adding that this requires enterprises to adjust their strategies in a more timely manner according to market demand, and coordinate immediate and long-term development.
It is urgent to improve the system and mechanism to promote the development and growth of the private economy in view of the new situation, boost the confidence of the private economy, and further stimulate the vitality of the private economy, the NDRC said.
This urgent need has given rise to the private economy development bureau, the first of its kind in China devoted to the private sector.
THE NEW BUREAU
Wei Dong, head of the bureau, told Xinhua that the establishment of the bureau, as a special working organization to promote the development and growth of the private sector, provides a strong guarantee for promoting its high-quality development.
“It is our founding mission to serve the development and growth of the private sector wholeheartedly,” said Wei, adding that “the bureau and private enterprises belong to one family.”
Wei, speaking during the roundtable talk, highlighted the bureau’s function of providing services to the private economy, noting that the main responsibilities of the bureau include staying on top of the development of the private economy, focusing on its needs and coordinating and organizing the formulation of policies and measures to promote its development, and providing policy incentives to promote the growth of private investment.
The bureau will also be responsible for establishing a mechanism for regular communication with private enterprises, coordinating efforts to solve major problems concerning the development of the private economy, and working toward enhancing its international competitiveness, according to Wei.
To that end, the bureau has taken concrete measures in its latest moves, said Wei. For example, it has added local government support for the development of the private sector to the list of matters to be annually supervised by the State Council, and rewards will be given to those excelling in this regard.
Recently, China introduced an array of policies to shore up the growth of the private economy.
In mid-July, the Communist Party of China Central Committee and the State Council jointly issued guidelines on boosting the growth of the private economy, promising to improve its business environment, enhance policy support, and strengthen legal guarantees for its development.
In late July, the NDRC unveiled 17 measures to further encourage private investment. It also worked with multiple departments and jointly released 28 measures to boost the growth of private enterprises in terms of market access, factor support, legal guarantees, enterprise services, and business environment.
In early August, the country introduced and extended a string of preferential policies for small and private businesses related to tax and fee cuts.
To strengthen financial support for private investment, the NDRC has given full play to the investment-lending linkage mechanism established with seven banks, and referred the first batch of 715 private investment projects to relevant banks.
To optimize the business environment for private companies, the State Administration for Market Regulation has continued to strengthen supervision and law enforcement, standardize the market order, effectively ensure fair trading, and further shored up the protection of intellectual property rights, said Liu Jun, deputy head of the administration.
VOICES OF ENTREPRENEURS
Qitan Technology Ltd., Chengdu, is a high-tech enterprise focusing on nanopore sequencing technology. In 2020, the company developed China’s first nanopore gene sequencer, filling the blank concerning new generation nanopore sequencing technology in the country.
Bai Jingwei, the company’s co-founder, said that China’s policy support to the health sector has encouraged private investment to this sector and is an important factor behind the sector’s rapid development over the past five to 10 years.
Upbeat about the future, Bai said the company will continue to take steps to make gene sequencing technology more accessible and affordable to ordinary people.
Zhou Zhen, president of Guangzhou Hexin Instrument Co., Ltd., told the roundtable that he is optimistic about the market prospects of tech-intensive products, saying that this is where his company’s biggest opportunities lie.
Focusing on mass spectrometry, the scientific instrument producer is among the first batch of “little giants” certified by the Ministry of Industry and Information Technology, an official category of selected innovation-driven small and medium-sized enterprises that enjoy a raft of supportive government policies.
Hangzhou Wahaha Group, the once school-run firm and now a food and beverage giant, is deemed an iconic Chinese private firm. For Wahaha, bold innovation and renewal are always the keys to outperforming rivals in fierce market competition and sustaining expansion.
“For Chinese entrepreneurs, it is essential to be patriotic, to innovate continuously and to care for employees,” the group’s founder Zong Qinghou told the roundtable. “Only in this way can private firms thrive,” the 77-year-old entrepreneur added.
Positive Trends in China’s Economy:
- Long-Term Improvement Predicted by Experts:
- Shayne Heffernan emphasizes that China’s economy is poised for long-term improvement. The positive momentum extends to the private economy, a crucial driving force in China’s modernization efforts.
- Private Economy Development Bureau’s Strategic Role:
- The establishment of the Private Economy Development Bureau under the National Development and Reform Commission (NDRC) signals a strong commitment to fostering high-quality development in the private sector. Knightsbridge sees this as a strategic move to ensure the sector’s sustained growth.
Private Sector Status Quo:
- Resilience Amid Global Challenges:
- Despite challenges posed by the sluggish world economic recovery, recent data reveals that China’s economy grew by 5.2 percent year on year in the first three quarters of 2023. Shayne Heffernan acknowledges the resilience of the private sector, which contributes significantly to tax revenue, job creation, and overall GDP growth.
- Common Challenges Faced by Private Enterprises:
- Private enterprises, numbering over 50 million, confront common issues related to capital, talent, and technology. Knightsbridge points out that while the market is showing signs of recovery, enterprises are adapting to changes in order patterns, requiring agile strategies to navigate the evolving business landscape.
The New Bureau’s Mission:
- A Holistic Approach to Private Sector Growth:
- Head of the Private Economy Development Bureau, Wei Dong, asserts that the bureau’s mission is to wholeheartedly serve the development and growth of the private sector. Knightsbridge underscores the bureau’s commitment to providing services, focusing on the sector’s needs, and formulating policies to incentivize private investment.
- Concrete Measures for Sectoral Support:
- The bureau has already taken concrete steps, including adding local government support for private sector development to the State Council’s annual supervision list. Knightsbridge notes that such measures aim to enhance the sector’s international competitiveness and boost confidence.
Policy Initiatives and Future Outlook:
- Government Initiatives to Boost Private Economy:
- In response to challenges faced by private businesses, the Chinese government has introduced a range of policies, including tax and fee cuts, to encourage growth. Knightsbridge acknowledges these initiatives as supportive measures for the private sector.
- Entrepreneurial Voices Optimistic About the Future:
- Entrepreneurs from companies like Qitan Technology and Guangzhou Hexin Instrument express optimism about market prospects, citing policy support as a driving force. Knightsbridge expert Shayne Heffernan emphasizes the importance of continuous innovation and patriotism for private firms to thrive.
Conclusion:
As China navigates a complex global economic landscape, the positive outlook on its private economy resonates with optimism. With the Private Economy Development Bureau at the forefront and experts like Shayne Heffernan endorsing these developments, China’s private sector seems poised for sustained growth and innovation in the years to come.
