China’s private sector set to drive economic growth in 2024

China’s private sector, which comprises of more than 50 million enterprises, is expected to grow in 2024 in the wake of government policies introduced in 2023 to support the sector, experts are predicting.

“This year, China’s private sector will be less constrained and is expected to receive more encouragement and support from authorities. Private enterprises will also move forward with fewer burdens,” said Dong Yu of the China Institute for Development Planning at Tsinghua University.

Dong, who had also worked for the Office of the Central Committee for Financial and Economic Affairs, made the remarks at the recent Central Economic Work Conference.

He said supportive policies announced by government last year will be implemented in 2024, generating real benefits for private enterprises this year.

Private enterprises contribute over 50% of the country’s tax revenue, 60% of GDP, 70% of technological innovation and 80% of urban jobs, and are expected to play a bigger role in driving China’s economic growth this year.

The conference heard that China will implement a number of measures to strengthen enterprises, including better market access, access to factors of production, fair law enforcement and protection of rights and interests.

“In fact, many major tasks envisioned during the conference provide development directions for the private sector to take this year,” Dong said. For example, private enterprises are expected to help China develop new productivity boosters.

Wang Peng, a senior researcher at the Beijing Academy of Social Sciences, said additional possible measures for this year could include the removal of institutional barriers restricting market access for private enterprises, strengthened fair law enforcement and increased financial support, including tax reductions and assistance in accessing credit.

The conference also emphasised efforts to implement new mechanisms for cooperation between the government and sources of private capital. The country will support the participation of private capital in new infrastructure and other areas, the conference heard. This refers to high-tech facilities that use, or are related to, artificial intelligence, the latest telecom formats, the industrial internet and the internet of things (networks of devices that can connect and exchange data).

Song Xiangqing, a professor at the School of Government at Beijing Normal University, said private companies are expected to have more opportunities to play a bigger role in major national projects related to infrastructure, new urbanization, transportation and hydraulic engineering in the future.

Song said: “The government wants to remove those barriers that hinder the development of private enterprises. The government also aims to enable private enterprises to compete in the market at a higher level and in a larger field. It would activate the intrinsic ability of private enterprises to innovate and become more competitive on the global stage.”

Against the backdrop of a sluggish world economic recovery, the Chinese government made concerted efforts to support the private sector last year and launched a series of supportive policies.

In the summer it issued 31 measures to boost the growth and development of the private sector. Breaking down market barriers and protecting the rights of entrepreneurs abroad featured among the proposed measures.

Around the same time, the National Development and Reform Commission (NDRC), the country’s top economic regulator, unveiled 17 measures to further encourage private investment. It also worked with multiple departments and jointly released 28 additional measures to boost the growth of private enterprises, focusing on access to markets, support for factors of production, legal guarantees, enterprise services and business environment.

In September, the NDRC set up a private sector development bureau, with a focus on the sector’s needs, including coordinating and organising the formulation of policies and measures to promote its development, and provide policy incentives to boost private investment.

Wei Dong, head of the bureau, said it has already introduced concrete measures, including the provision of local government support for the development of the private sector to the list of matters to be annually supervised by the State Council. The bureau will reward those excelling in this regard, Wei said.