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China to increase support for private firms to bolster recovery
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People walk in the Central Business District on a rainy day in Beijing, China, on July 12, 2023. (Reuters/Thomas Peter)
C
hina on Wednesday pledged to make the private economy "bigger, better and stronger" with a series of policy measures designed to help private business and bolster the flagging post-pandemic recovery.
Weak growth in the world's second-largest economy has created an urgency to revive the private sector, a key growth driver that has been bruised by COVID-19 curbs and a wide-ranging regulatory crackdown that targeted sectors from technology to property.
China will strive to create a market-oriented first-class business environment, state news agency Xinhua said, quoting guidelines published by the Communist Party and the cabinet.
"The private sector is a new force to promote Chinese-style modernisation, an important foundation for high-quality development and a key force to promote China's comprehensive construction of a socialist modern power," Xinhua said.
The measures include protection for the property rights of private firms and entrepreneurs and steps to ensure fair market competition by breaking down market-entry barriers.
They will also create a "traffic light" system to make clear the areas in which private investors are able to invest, as well as encouraging some private companies to issue technology innovation bonds.
The guidelines will include support for eligible businesses to list and refinance, Xinhua said.
Authorities have started to reverse some restrictive policies on tech and property sectors to try to boost the economy, with policymakers holding a series of meetings with companies from sectors ranging from tech to modern logistics to try and increase confidence.
Private fixed-asset investment shrank by 0.2 percent in the first six months from a year earlier, in contrast to an 8.1 percent rise in investment by state entities, official data showed on Monday, highlighting the weak private sector confidence.
Other measures announced on Wednesday include support for so-called platform companies to play an important role in job creation and international competition. Private companies will be encouraged to increase investment in areas such as power generation and storage, and the industrial internet.
China is also encouraging private enterprises to increase investment in research and development and participate in investment and construction of new types of infrastructure.
The guidelines also say authorities will promptly refute "erroneous statements and practices" that could hurt private firms, and respond to their concerns in a timely manner.
China's economy grew at a slow pace in the second quarter as demand weakened at home and abroad, raising pressure on policymakers to deliver more stimulus to shore up activity.
