China’s government pledges more support for private sector

The latest Chinese government guidance to promote development of the private sector, designed to help them drive employment and stimulate economic growth, will give firms the “greatest confidence to develop”, according to industry experts.

They made the comments as the Communist Party of China Central Committee and the State Council, the country’s Cabinet, released a document detailing 31 measures to drive development of private enterprises, including breaking down market barriers and protecting rights of entrepreneurs abroad.

Pony Ma, chairman and CEO of leading tech company Tencent Holdings, said the guidance addresses concerns of entrepreneurs regarding business environment, policy support, regulatory guidance, legal protections as well as public opinion atmosphere, and introduces practical policy measures.

Ma said: “Notably, the guidance has made clear the development direction of platform companies, which will greatly boost our determination and motivation for future development.”

He added: “China’s platform economy has entered a brand-new development period, and the traditional business development model is being transformed and renewed.

“The value of platform companies in driving (consumption) demand, innovative development, employment, entrepreneurship and public services is waiting to be fully tapped into. It sets clear the goal of platform enterprises to be open and innovative as well as enablers during future development.”

Yang Hui, a member of the National Committee of the Chinese People’s Political Consultative Conference and chairman of Yunzhanghu, an online jobs platform, said that the guideline has given the “greatest confidence” to private enterprises and entrepreneurs to develop in the future.

“As the guidance has launched very detailed policies, private enterprises need not worry about whether they can expand investment, but only need to consider whether their business model is feasible, and to develop with greater resources input and the most positive attitude,” Yang said.

The private sector has been a driver of the nation’s economic growth and innovative development. Private firms contributed about 50% of the country’s tax revenue, 60% of GDP and 70% of technological innovation, according to the Ministry of Industry and Information Technology.

According to the latest data from the State Administration for Market Regulation, the nation’s top market regulator, the number of registered private enterprises exceeded 50.93 million by the end of May.

The new government guidance also proposes to protect the financial safety of entrepreneurs overseas and build a cooperation mechanism to prevent and resolve risks, Lei Jun, founder of smartphone firm Xiaomi Corp.

Liu Shangxi, president of the Chinese Academy of Fiscal Sciences, said economic recovery was weaker than expected in the first half, and that to stabilize market expectations, a “long-acting reassurance pill” must be given to private companies.

Noting that private investment has experienced negative growth in past months, he emphasized that the confidence of private enterprises, which are critical drivers of the country’s economic growth, must be bolstered.

 

China’s credit expansion beats market expectations

China reported stronger-than-expected credit expansion in June after the People’s Bank of China (PBOC), the country’s central bank, cut benchmarks for interest rates.

The country’s increment in aggregate financing – the total amount of financing to the real economy – came in at 4.22 trillion yuan (£454 billion) in June, the PBOC said.

The figure was up by 2.67 trillion yuan compared with May and beat market expectations of 3.22 trillion yuan as polled by market tracker Wind Info, although was still down 985.9 billion yuan compared with the same period last year.

The PBOC also said China’s new yuan-denominated loans were valued at 3.05 trillion yuan in June, up 229.6 billion yuan year-on-year. June’s figure bettered market expectations, which Wind Infor predicted would be 2.38 trillion yuan.

China’s outstanding aggregate social financing stood at 365.45 trillion yuan as of the end of last month, up 9% year-on-year. The growth rate, however, was down from 9.5% a month earlier.