Strengthening China's private sector for sustainable growth

Editor's note: Imran Khalid, a special commentator on current affairs for CGTN, is a freelance columnist on international affairs. The article reflects the author's opinions and not necessarily the views of CGTN.

Chinese President Xi Jinping's keynote speech at a Beijing symposium on private enterprises on Monday underscored the indispensable role of the private sector in China's economic future.

During the symposium, Xi noted that "The private sector enjoys broad prospects and great potential on the new journey in the new era. It is a prime time for private enterprises and entrepreneurs to give full play to their capabilities." His address underscores the reality that China's leadership recognizes the indispensable role of private enterprises in shaping the future of the nation's economy. With a clear policy direction and a commitment to structural reforms, China is poised to maintain its growth momentum while reinforcing its status as a global economic leader.

His remarks come at a time when debates on the relationship between state-owned enterprises (SOEs) and private businesses have gained traction, with some Western commentators arguing that China is witnessing a shift with "the state advancing while the private sector retreats." However, such a narrative fails to grasp China's nuanced and evolving approach to economic governance.

Since the inception of economic reforms over four decades ago, China's private sector has been at the forefront of innovation, job creation and economic dynamism. The private economy contributes over 60 percent to China's GDP, accounts for more than 80 percent of urban employment, and represents over 70 percent of technological innovation. These numbers alone show why the government remains committed to fostering a conducive environment for private enterprises.

China's rapid industrialization and rise as the world's second largest economy would not have been possible without the vibrancy of the private sector. From e-commerce to high-tech manufacturing, private firms have driven breakthroughs in artificial intelligence, biotechnology and renewable energy. These advancements have not only propelled China to global economic leadership but have also reinforced the resilience of its economy in the face of external shocks.

The symposium reaffirmed the government's unwavering support for private businesses, emphasizing policies aimed at improving the business environment, enhancing legal protections and ensuring fair competition. The symposium also reflected China's broader objective of achieving high-quality development, where private enterprises are seen as key drivers of productivity and economic modernization.

Recent regulatory measures targeting sectors such as real estate, technology and education have often been misconstrued by the Western media as signs of a government crackdown on private business. In reality, these policies are part of a broader attempt to address systemic risks, promote long-term sustainability, and ensure that economic growth remains inclusive.

Far from retreating, the private sector continues to expand into new frontiers.

The government has been introducing measures to facilitate access to financing, protect intellectual property rights, and lower operational barriers for small and medium-sized enterprises. Such initiatives highlight a strategic intent to empower private businesses, not stifle them.

By the end of September 2024, China had over 180 million private economic entities, making up 96.37 percent of all businesses–a 3.93 percent increase from the previous year and a fourfold surge in just over a decade.

Among them, private enterprises totaled 55.5 million, growing at 6.02 percent annually, while individual businesses stood at 125.3 million, reflecting a 3.03 percent increase. These figures underscore the resilience and expansion of China's private sector, challenging the misleading narrative of its decline.

China's evolving business landscape reflects a sustained push to unlock market potential and strengthen economic resilience. By fostering a dynamic private sector, Beijing is not only bolstering domestic growth but also reinforcing its role as a key player in global innovation and economic stability.

Acknowledging the private sector's indispensable role, the Chinese government has consistently advanced policies to support private enterprises, ensuring equal protections for all businesses. Streamlined registration processes and a more business-friendly regulatory framework have enabled private firms to expand their market presence. As a result, China's private sector continues to thrive, reaffirming its role as an engine of economic dynamism.

The ongoing push for innovation-driven growth, digital transformation and green development hinges on the active participation of private businesses. The leadership understands that a thriving private sector is fundamental to China's ambitions of becoming an innovation powerhouse. China's economic trajectory remains firmly anchored in market-oriented reforms.

The government's engagement with private entrepreneurs, coupled with ongoing policy refinements, reflects a pragmatic approach aimed at fostering an environment where businesses–both state-owned and private–can thrive together. Rather than retreating, the private sector is being empowered to take on new opportunities in sectors such as advanced manufacturing, digital economy and international trade.

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