Peking University's Guanghua School of Management released a survey report on China's small and micro-business operators at a recent seminar. The seminar brought together scholars, industry experts and practitioners to discuss the current state of small businesses, the pressures they face, the changes brought by artificial intelligence and digital tools, and the policies needed to support their growth. The following are excerpts from their remarks.
Supporting small enterprises through stable expectations
By Tian Xuan
Small and micro-businesses are the deepest foundation of China's economy and the broadest micro-level base of its growth.
Understanding their operating conditions, responding to their policy expectations and paying attention to their survival and development is not only an academic task, but also a responsibility of our time.
China's GDP grew by 5 percent in 2025 despite a complex external environment and insufficient domestic demand. This was no easy achievement. For 2026, setting the growth target as a flexible range reflects an effort to reduce the emphasis on a single numerical level and shift attention toward high-quality development.
It also leaves more room for structural adjustment, risk prevention and livelihood improvement.
The logic of expanding domestic demand is changing. It is moving away from direct policy stimulus and toward activating the market's own internal momentum.
The key is to stabilize employment so that people have money to spend, strengthen social security so that people dare to spend, and create new consumption scenarios so that people have places and reasons to spend.
To foster new growth drivers, China needs to upgrade traditional industries, develop strategic emerging industries, make early plans for future industries, and improve the quality of the service sector so as to extend both ends of the "smile curve".
For small, medium and micro-enterprises, two macro-level supports are especially important. The first is a sound legal environment.
China should strengthen the implementation of the Private Economy Promotion Law, advance legislation on a personal bankruptcy system, and give "honest but unfortunate" entrepreneurs a real chance to start again. Stronger intellectual property protection is also essential, as it can provide clear incentives for private and small businesses to innovate.
The second is a stable macro-policy orientation. Research shows that policy orientation itself does not have a significant impact on corporate innovation, but policy uncertainty can seriously discourage long-term investment. It is therefore crucial to maintain policy continuity, stability and consistency, so that the market can form steady expectations. This is vital for encouraging small and micro enterprises to invest, innovate and grow over the long term.
Reading the economy through small businesses
By Zhang Xiaobo
China's small and micro-business operators offer a valuable window into the real economy. Our long-running survey has collected nearly 250,000 questionnaires, including a large number of unregistered self-employed businesses.
These operators are highly sensitive to macroeconomic changes. Their profit margins, cash flow and confidence readings are closely correlated with indicators such as PMI, CPI and unemployment.
The main pressure facing small businesses today is no longer on the production side. It is weak market demand. Costs are rising, but many small businesses have limited room to raise product prices or wages, which has intensified competition and price pressure. At the same time, their expectations for macroeconomic growth and CPI remain relatively low.
Yet small businesses have shown strong resilience. Many respond by working longer hours and adopting digital tools. Digitalization is bringing structural changes. Online sales and the use of information systems have continued to rise after the pandemic, and roughly one in four small and micro-businesses have already adopted AI.
Digitalization has also helped expand female entrepreneurship. Over the past five years, the share of female entrepreneurs among small business operators has more than doubled from 17 percent to 36 percent.
One important reason is the equalizing effect of online credit: women often enjoy credit-score advantages in digital lending, which has improved their access to financing.
Future policy should shift more toward inclusive measures that improve livelihoods and expand demand. Raising the basic pension for rural elderly residents, for example, could more effectively stimulate consumption and market vitality. At the same time, entrepreneurs need a more stable and enabling environment for development.
AI is also accelerating a trend toward smaller organizations. This will fundamentally reshape employment and social security. China's existing social insurance, medical insurance and related legal systems were largely designed around traditional employment in large companies. They are increasingly out of step with the rise of flexible work, one-person companies, delivery riders and other new forms of employment.
The social security system therefore needs a more fundamental adjustment. A more inclusive protection mechanism would allow residents, including small and micro-business operators, to share more fully in the benefits of technological innovation and development. Only when people feel more secure can they consume with greater confidence and help form a healthier cycle of demand and growth.
Small businesses must be able to share AI's gains
By Cai Fang
For small and micro-enterprises, sharing in the opportunities created by artificial intelligence is especially important. AI is a major new source of total factor productivity growth. By using data and algorithms, it can sharply reduce waste in resource allocation and turn the reallocation of resources from broad, block-level shifts into a more detailed and precise process. Its potential is enormous.
But AI also brings "creative destruction". It can accelerate the birth and death of businesses, as well as the destruction and creation of jobs. Small and micro-enterprises are often the first to feel this pressure. They are relatively more vulnerable and may face shorter survival cycles. This could worsen structural employment mismatches and widen income gaps.
The future path of employment destruction and creation is likely to follow a "J-shaped" curve. In the short term, job losses may happen before new jobs are created. Whether the creation effect materializes, and how strong it becomes, will depend on how proactive and effective the policies are.
The policy logic should therefore change: businesses may compete and be selected by the market, but people should not be divided into winners and losers. The zero marginal cost and open-source nature of AI should be used to narrow the digital and intelligence divide facing small businesses and workers, so that they can share in the gains from higher productivity.
To achieve this, investment in physical assets must be better combined with investment in people.
More resources should go into inclusive social protection and human capital, giving entrepreneurs basic support even after business failure. Policies should also adapt to the fact that new forms of employment are becoming the new normal.
Social security and labor market systems need to be updated to support small businesses and workers caught in the cycle of creative destruction.
Whether AI becomes a blessing or a burden for small and micro-enterprises depends on whether its empowering features can be fully utilized. This is an external technological change that no individual business can avoid. To help small businesses share the benefits, they need targeted support.
For example, the government can coordinate with large technology companies to use AI's zero marginal cost advantage by sharing models, platform APIs, tokens and other technical resources, helping close the digital divide.
Using the empowering capability of technology to offset its disruptive effects is necessary to help small and micro-enterprises survive. It is also essential for keeping the overall economic cycle sustainable.
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