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Chinese’s support for private sector unchanged, said Vice Premier Liu He

Last updated on September 7, 2021

China has stepped up efforts to reassure the market that the private sector has the unswerving support of the top leadership, after a regulatory crackdown has unnerved many entrepreneurs.

“There are no changes in the principles and policies for supporting the development of the private economy; they have not changed now and will not change in the future,” Liu said in a video speech to a digital economy expo on Monday.

Private company must be offered “vigorous” support so they can play a more significant part in growing China’s economy, creating jobs and deepening technological innovation, he said.

“The private economy has contributed more than 50 per cent of total tax revenue, more than 60 per cent of gross domestic product, more than 70 per cent of China’s technological innovation, more than 80 per cent of urban employment, and makes up more than 90 per cent of market entities.”

Therefore, it is critical the central government continues to nurture the sector, while managing risks in areas such as property and intellectual property rights, Liu said.

The Vice-Premier called on authorities to create a favourable environment for private firms and entrepreneurship in the digital economy.

On the same day, President Xi also lent his voice in support of the digital economy on Monday, an area dominated by the private sector that has come under increasing scrutiny.

Xi sent a congratulatory letter to the International Research Centre of Sustainable Development for Big Data, which launched a forum on big data and sustainable development goals in Beijing on Monday.

He said establishment of the international research centre was an important measure that underpinned his promise to support the United Nations 2030 Agenda for Sustainable Development.

“At present, the world is suffering from the huge impact of the new crown pneumonia epidemic,” he said in the letter. “Technological innovation and the application of big data will help the international community overcome difficulties and implement the 2030 Agenda.”

Despite the warm words, prominent Chinese economists have called for policymakers to stop treating private enterprises differently from the public sector and state-owned enterprises.

Wei Jianing, a former research fellow at the Development Research Centre under the State Council – China’s cabinet – said policymakers need to “completely emancipate” their minds and provide fundamental legal protection for private entrepreneurs.

“We need to cure the panic disorder around private enterprises and let them be permanently assured,” he said at a symposium last Wednesday.

The campaign is likely to undermine the innovation China needs to sustain rapid growth and increase concern among investors about political risk, he warned.

Jia Kang, a former director of the Ministry of Finance’s Research Institute for Fiscal Science, said China should recognise private ownership was not a target to “eliminate”, but instead, private companies could succeed alongside state-owned enterprises through the shareholding system.

“Under the current complex and changing situation, we need to give the public, especially those leading private companies a sense of direction, safety and hope,” Jia said in a speech last month at a Chengdu forum, according to a transcript published on Sunday.