The Chinese leadership needs to regain the confidence of the private sector to get the economy moving again.
(Photo: Bloomberg)
Beijing In view of the sluggish economic recovery, China’s leadership wants to strengthen private companies. That comes from a 31-point statement released by the ruling Communist Party’s Central Committee and the State Council, China’s executive branch, on Wednesday evening local time.
It states that the private sector is a “crucial force” for China’s modernization. However, the measures mentioned are less important than whether they will succeed in restoring the confidence of private companies.
The announcement follows the release of weak economic data on Monday. Accordingly, the second largest economy in the world grew by only 0.8 percent from the first to the second quarter.
This means that it is recovering from the consequences of the corona pandemic much more slowly than many had hoped. In the spring, the government set itself a growth target of around five percent compared to the previous year.
The private sector has a key role to play here. Private companies provide more than 60 percent of gross domestic product and more than 80 percent of jobs in the cities.
What the company is promised
Both the strict corona measures and strong state intervention in the tech sector, for example, have caused great uncertainty among private companies. That is why they are now reluctant to invest.
The MoU promises improvements in market entry, fair competition, financing, intellectual property rights and legal protection. The most important signal sent by the document, however, is that the party leadership emphasizes the role of the private sector in the modernization of the country.
According to the paper, the aim is to support private companies to grow, improve and strengthen so that they can play a greater role in the “great resurgence of the Chinese nation”. The decisive factor will be whether the companies believe the words.
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In a rare public statement, internet company Tencent co-founder Pony Ma hailed the government’s promises to revitalize the private sector in a post on state broadcaster CCTV’s website on Thursday. Ma, who has previously expressed his support for Communist Party (CP) policies, repeated many of the official stances published the day before in his post.
The announcement follows the release of weak economic data on Monday.
(Photo: dpa)
His comment is notable because the social media giant has suffered from regulations in the tech sector for the past two years. With strong state intervention, the state leadership significantly expanded its control over the previously largely unregulated corporations from the end of 2020 and brought them into line.
They are designed to serve the interests of the ruling Communist Party and help modernize industry. Recently there have been increasing indications that the hot phase of the so-called corrective campaign is over, probably also due to the weak recovery of the Chinese economy.
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