After a bitter winter, the private economy is beginning to receive a tide of favorable measures. The recently-concluded Central Economic Work Conference reiterated that China will work unswervingly both to consolidate and develop the public sector and to encourage, support and guide the development of the non-public sector. In addition, it clarified a clear and decisive stance against incorrect opinions on adhering to the “two unswerving rules.”
Furthermore, leaders and officials at all levels are required to bring tangible benefits to private enterprises, so as to establish a cordial and clean relationship between government and business. A Dec. 20 executive meeting of the State Council also stressed support for private enterprises to boost their confidence and improve development. All these statements are of practical significance with a clear-cut attitude, and practical action is to be implemented.
In the face of the three-year Covid-19 pandemic, as well as complex domestic and international environments, the private economy suffered an unprecedented impact, during which its importance has been revealed. The private economy matters, because private enterprises have contributed more than 50% of the country’s tax revenue, 60% of GDP, 70% of technological innovation, 80% of urban employment and 90% of the total number of companies. Therefore, their plight will naturally give rise to a strong negative effect, especially on tax revenue and employment.
For example, many entities in the service sector closed down for a long time and quite a few platform enterprises laid off many workers. A tough job market matters to the national economy and family livelihoods. It is also more likely to become a social problem. As a result, supporting private enterprises is vital to boosting the national economy and stabilizing Chinese society.
China’s private economy has evolved with the country’s reform and opening up, as well as the development of the economy. The reform and opening up began with and benefited from the breaking up of the commune system, which upheld collectivized living arrangements and socialized domestic labor.
The private economy matters to reform and opening up. It is hard to believe that a person who was extremely suspicious of private enterprises can genuinely uphold the tenets of reform and opening up.
The Central Committee has issued documents and convened special meetings to highlight the “two unswerving rules,” but dissenting opinions remain. From the early “theory of original sin” of private enterprises and the “withdrawal theory” of the private economy to “replacing the market economy with the people’s economy,” every formulation has sparked a firestorm of controversy, putting private enterprises on tenterhooks and making entrepreneurs extremely wary of long-term investments. This critically threatens the sustainable development of China’s economy.
The Central Economic Work Conference took an unambiguous attitude toward improper discourse. This is highly realistic and targeted. The key is to take a stand on supporting the private economy with policies and actions, rather than silencing misleading voices.
We also need to reflect on the underlying causes of the resurgence of such voices. If we fail to remove skepticism or hostility towards the private economy, private enterprises cannot grow in a worry-free environment. Such suspicions and hostility may have been born of complex historical, tangible and conceptual reasons, so they need to be addressed from multiple angles.
In 2018, the Communist Party of China’s General Secretary Xi Jinping stressed in a symposium that “private enterprises and private entrepreneurs are our people.” But the facts show this important concept is yet to be firmly understood.
We shall correct wrong views on the private economy as soon as possible in the spirit of emancipating the mind and seeking truth from facts. Throughout the past 40 years of reform and opening up, we can observe that the participation of social elites in private enterprises has helped invigorate China’s economy. Entrepreneurs throughout different times constitute essential driving forces for China’s economic growth.
However, when entrepreneurs live in terror and uncertainty, China’s economy tends to face great difficulties. From a regional perspective, places with prosperous economies have harmonious communities, while those with weak private economies have stagnant economies and poorer livelihoods. The contrast is evident.
To stabilize the expectations of the private economy and rebuild the confidence of private entrepreneurs, it is critical to ensure equal protection and maintain fairness. Private enterprises just want to be treated equally.
As mentioned at the Central Economic Work Conference, institutional and legal measures should be taken to implement requirements for equal treatment of state-owned companies and private enterprises, while the development and growth of the private economy and private enterprises should be encouraged and supported through policies and public opinion.
Property rights of private enterprises and the rights and interests of entrepreneurs are supposed to be protected in accordance with the law. These statements of principle need to be fulfilled urgently.
In recent years, the central government has focused on correcting wrong or false convictions involving private entrepreneurs and has published a number of typical cases. That said, continued efforts must be made to protect the rights and interests of private entrepreneurs. It is quite common to see that public enterprises are valued more than private ones and that enterprises of different ownership are treated differently, especially in terms of financing and market access.
The protection of the private economy should be dependent on good policies, but even more on the rule of law. The latter is able to provide stable expectations for enterprises and guarantee the legitimate operation of private companies. More importantly, it restrains the overuse of power.
When it comes to market order and the business environment, private enterprises are the most sensitive and are in the best position to judge. The central government has noted multiple times that it would introduce policies of contraction. Compared to the rule of law, policy measures are arbitrary to a certain extent.
It must be pointed out that valuing the private sector does not mean fostering a cult of private enterprises, but that all companies must operate in accordance with the rule of law. China’s central government has recently made great efforts to fight against monopolies, which, in principle, is not contradictory with the “two unswerving rules.” Instead, they are mutually complementary.
The basic economic system has been enshrined in the Constitution. The development and growth of the private economy is a matter of national long-term stability and the people’s livelihood. Where private enterprises cannot enjoy full development, it is impossible to see that “the market plays the decisive role in the allocation of resources.”
Only when private entrepreneurs are at ease and there is vibrancy in the market can China’s economy come near to achieving high-quality development and the country can possibly develop into an innovation-based country and reform and opening up be truly deepened. It is hoped that the coming years will show us the significance of the recent policies.
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