Incremental policies are tangible and can add confidence and vitality to the private economy

As the Chinese government implements a series of robust policies to support private enterprises during challenging times, significant initiatives are being rolled out to facilitate their growth.

On October 24, a major announcement was made during a conference on promoting high-quality development of the private economy, where the National Development and Reform Commission (NDRC) stated, “We will support capable private enterprises in leading major national scientific and technological projects and further open up national research infrastructure to them.” This move acts as a catalyst for innovation within the private sector.

A comprehensive set of policies aimed at increasing support for businesses is a key focus. The NDRC has revealed that it is working alongside relevant departments to swiftly address the issues raised by private enterprises, enhancing their confidence in growth. They are committed to ensuring that these incremental policies are effectively implemented and accessible to businesses.

In addition, on October 10, a draft law to promote the private economy was publicly released for feedback. This landmark legislation is China’s first foundational law focused specifically on the development of the private sector. Its aim is to alleviate the concerns of entrepreneurs, allowing them to focus on their business without fear.

Addressing recent complaints about profit-driven enforcement practices, the NDRC has taken steps to establish a communication and coordination mechanism with judicial authorities to tackle issues related to arbitrary penalties, inspections, and enforcement outside businesses’ home jurisdictions. They are also enhancing monitoring of local revenue from fines and confiscations.

With regard to large-scale nuclear power investments, which traditionally involve lengthy cycles and high safety standards, the recent approval of five nuclear projects in August has opened the door to private capital, allowing private enterprises to own a 10% stake for the first time.

Looking forward, the NDRC has indicated plans to further dismantle barriers to market entry, encouraging more private capital to participate in major infrastructure projects in sectors like energy and transportation.

Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund, recently emphasized that the recovery of the Chinese economy hinges on revitalizing the private sector.

Critics who claim China neglects the development of private enterprises and view government actions as less impactful fail to understand the underlying trends of the Chinese economy. As relevant policies are increasingly implemented effectively, positive factors for the growth of the private economy will continue to emerge.

In the first three quarters of this year, there has been stable growth in private industrial production, with significant increases—over 20%—in sectors such as new energy vehicles, integrated circuits, and 3D printing equipment, which have a notable representation of private enterprises. Additionally, private companies have enhanced their contributions to foreign trade, with export growth outpacing the overall rate, while private investment in the manufacturing sector rose by 11.6%, exceeding the overall growth of manufacturing investment by 2.4 percentage points.

A robust private sector translates to a thriving economy. By avoiding superficial measures and targeting the actual issues, China’s private economy is poised for new opportunities for development.