Support for private sector to significantly shore up market confidence, experts say
China's latest push to bolster the growth of its private sector will greatly boost the confidence of entrepreneurs and give full play to the significant role of private enterprises in creating job opportunities and reviving economic recovery amid downward pressures, experts and company executives said.
They hailed the policy measures that were announced recently to encourage private investment and stimulate the private economy, and highlighted that these steps will significantly shore up market confidence. They said the measures will also motivate private enterprises to beef up their innovation capabilities and achieve breakthroughs in crucial technologies, thus promoting industrial upgrading.
Su Jian, a professor at Peking University's School of Economics, said the private sector serves as a vital force in advancing Chinese modernization and plays a key role in stabilizing economic growth, expanding employment and boosting technological innovation.
The country has sent a clear signal that it is committed to promoting the healthy and sustained development of the private economy, he said.
Su underscored that China's enhanced supportive measures, which have been introduced to tackle prominent problems facing private enterprises and to improve the business environment, are key to boosting confidence and stabilizing the expectations of private enterprises and entrepreneurs, which will further consolidate the economic recovery trend.
Noting that some private enterprises are facing mounting challenges such as rising production costs, cash flow pressure and financing difficulties, Zhou Maohua, an analyst at China Everbright Bank, said, "It is important to strengthen financial support for micro, small and medium-sized enterprises, and further deepen reforms to eliminate hidden barriers that hinder the development of the private sector."
On July 24, a meeting of the Political Bureau of the Communist Party of China Central Committee, which set the policy tone for the second half of the year, emphasized efforts to "effectively optimize the development environment for private enterprises".
More policies should be formulated and rolled out to spur private investment, while the authorities will establish and improve regular communication and exchange mechanisms with enterprises, the meeting said.
The leadership meeting came after the CPC Central Committee and the State Council, the country's Cabinet, issued a top-level guideline on July 19, detailing 31 measures such as facilitating private enterprises' access to funding, reducing market entry barriers, promoting fair competition and supporting development of platform companies to generate jobs and spur consumption.
On Aug 1, the National Development and Reform Commission, the country's top economic planner, along with a group of ministries, rolled out 28 detailed measures including tax cuts and removal of red tape to bolster the private economy.
Private enterprises will be encouraged to participate in major national projects that are profitable and mature, issue real estate investment trust products for infrastructure projects and lead technological programs in key areas, the NDRC said.
The central government also unveiled detailed measures to stimulate the vitality of private investment.
Entrepreneurs hailed the raft of policy measures on boosting support for the private sector, expressing strong confidence in and determination for their future growth.
Zhang Yong, chairman and CEO of Alibaba Cloud Intelligence Group, said these supportive policies have set the direction for the company's healthy development.
The core competitiveness of platform companies lies in innovation, he said, adding that new technologies and the platform economy resonate at the same frequency, which has created broad development space for the group.
"The industrialization of digital technologies and the digital transformation of industries are together a vibrant manifestation of the integration of the digital economy with the real economy," Zhang said.
He emphasized that Alibaba is making use of digital technologies to help small and medium-sized enterprises and speed up industrial transformation, in order to empower the real economy.
Xu Ran, CEO of Chinese e-commerce giant JD, said the company will further increase investment to promote technological innovation, build global supply chain infrastructure, and bolster the application of artificial intelligence technologies in more industries and scenarios.
JD has invested more than 100 billion yuan ($13.7 billion) in basic science and technology R&D since 2017, Xu added.
The private sector, which was instrumental in China's economic rise over the past few decades, contributes about half of the country's tax revenue, 60 percent of its GDP and 70 percent of its technological innovation. It also accounts for 80 percent of urban employment, official data showed.
Zhou Hongyi, founder of Chinese cybersecurity company 360 Security Group, said the recent policy development has affirmed the significant role of private enterprises in driving technological innovation and stabilizing employment, and it will bring new historic opportunities for the high-quality development of the private economy.
"Private enterprises should make full use of their strengths in technologies to accelerate the construction of digital infrastructure and press ahead with digital and intelligent transformation in the traditional manufacturing sector, in order to help bolster economic growth," he said.
Xu Hongcai, deputy director of the economic policy committee of the China Association of Policy Science, said the central authorities' supportive attitude toward the private sector will help invigorate the vitality and creativity of private enterprises, and provide more opportunities for the private sector to participate in key national projects.
Xu called for more detailed steps to further encourage private investment in high-tech and equipment manufacturing sectors, strengthen financial assistance to private investment projects, improve policies for tax and fee reductions, and enhance enterprises' indigenous innovation capacities in core technologies in key fields.