China looks to boost private sector entities
China has set up a dedicated bureau – part of the National Development and Reform Commission (NDRC) – to promote the development of the private economy, officials from the nation’s top economic regulator and government ministers have announced.
The new private economy development bureau will be responsible for coordinating and drafting policies to bolster the sector and promote the development of private enterprises both at home and internationally, said Cong Liang, deputy head of the NDRC, said at the launch of the scheme.
Cong said: “It is a powerful initiative… as promoting the development of the private economy is a systematic and big project that involves various entities, policies and working procedures.”
The move was welcomed by Tan Haojun, council member of the China Private Economy Research Institute. Tan said: “China has recently introduced a series of major policies and documents to promote the private economy, creating a well-rounded macro environment for the private sector. The key lies in whether these measures can be put in place. Thus the establishment of such a bureau has come exactly in time.”
China’s private sector is responsible for 60% of the country’s GDP and 80% of new urban jobs. However, it has struggled to attract investment amid an economic slowdown. Data from the country’s National Bureau of Statistics shows that between January and July this year, private investment fell 0.5% year-on-year, compared with a 0.2% year-on-year drop in the first six months.
In order to boost private investment, the NDRC said that the commission is actively encouraging private investment projects in the infrastructure sector to issue real estate investment trusts, or REITs, and has successfully recommended the first such clean energy REIT project to the China Securities Regulatory Commission.
REITs refer to owning or financing income-producing real estate across a range of property sectors. Most REITs trade on major stock exchanges, and they are likely to offer a number of benefits to investors.
Xu Xiaolan, vice-minister of industry and information technology, said the ministry is set to launch guideline to drive the high-quality development of so-called ‘little giant’ companies, with a series of targeted supportive measures for technological innovation, supply chains and recruitment.
‘Little giant’ companies are innovative SMEs that own core technologies in a niche market and show great market potential.
Xu noted that among the country’s 98,000 ‘little giant’ companies, 95% are private ones. In the first seven months of 2023, the profit rate of firms was 5.5 percentage points higher than those of major SMEs in general.
Meanwhile, the Chinese government said it is considering additional supportive policies for the industrial sector, targeted to promote the high-quality development of the sector.
“We should grasp the critical period of economic transformation and upgrading, promote the transformation and structural adjustment of the industrial economy… and push forward its high-quality development,” said Tao Qing, an official with the Ministry of Industry and Information Technology (MIIT).
Tao said the ministry will liaise with other government departments to create a policies to improve communication with manufacturing enterprises and maximize the effectiveness of the policies.
This statement came after the country unveiled supportive measures for 10 industries, including steel, non-ferrous metals, chemicals, automobile, machinery and construction materials, which collectively account for about 70% of the value-added industrial output of major firms in the country, according to the ministry. “By stabilizing these key industries, we will be able to basically stabilize the industrial economy,” Tao said.
‘Growth to outpace other major economies’
China’s economic growth is set to outpace most other major economies in 2023 as the economy begins to pick up after years of interruption caused by the Covid-19 pandemic, according to international bank Credit Suisse.
Janice Hu, China CEO of Credit Suisse, said the optimization of Covid-19 policies, an increasingly sophisticated consumers, robust fundamentals and growing optimism are paving the way for a strong rebound.
She said Credit Suisse “sees invaluable opportunities for collaboration and growth as China deepens financial opening-up”, with the company having reached an agreement with its local partner to take full ownership of Credit Suisse Securities (China) Limited.
