China’s Environment Supports Private Sector Growth

China’s political, economic and social environment is “very conducive” to the development of the private economy and policies will be implemented to help ease difficulties faced by private firms, an official from the country’s state planner told state broadcaster CCTV on Tuesday.

The comments come after Chinese President Xi Jinping held a rare meeting on Monday with some of the biggest names in China’s technology sector, urging them to “show their talent” and be confident in the power of China’s model and market.

Breaking Barriers

China will further break down investment barriers and will revise its negative list for market access which restricts investment in certain sectors as soon as possible, Zheng Bei, deputy head of the National Development and Reform Commission (NDRC), told CCTV in a program aired on Tuesday.

Measures will be taken to promote more open and fair access to infrastructure in competitive sectors and major national scientific research infrastructure to private enterprises, she added.

At the same time, the NDRC and relevant authorities will work on alleviating some of the urgent challenges such as accessing affordable financing, Zheng said.

Monday’s meeting between Xi and corporate leaders reflected policymakers’ concerns about a slowdown in growth and efforts by the United States to limit China’s technological development, analysts said.

Bracing The Impact

U.S. tariffs threaten more pressure on the world’s second-largest economy, which has been reeling from weak domestic consumption and a destabilising debt crisis in the property sector.

“Beijing is repositioning the private sector as a pillar of national competitiveness amid economic and geopolitical headwinds,” Robin Xing, Chief China Economist at Morgan Stanley, wrote in a research note.

“But China still needs more consumption-centric reform and stimulus to sustain the return of corporate confidence.”

The private sector in China competes with state-owned companies and contributes more than half of tax revenue, more than 60% of economic output and 70% of tech innovation, official estimates show.

Agribusiness giant New Hope Group founder Liu Yonghao said many private enterprises in traditional industries have also new paths for development, but warned challenges still exist in complex domestic and external conditions, according to state-owned news outlet Yicai.

(With inputs from Reuters)