Private economy propels China's momentous economic growth

Editor's note: Djoomart Otorbaev, a special commentator on current affairs for CGTN, is a former prime minister of Kyrgyzstan, a professor of the Belt and Road School of Beijing Normal University, a member of Nizami Ganjavi International Center, and the author of "Central Asia's Economic Rebirth in the Shadow of the New Great Game." The article reflects the author's views and not necessarily those of CGTN.

Despite the challenging domestic and international environment, China's economy successfully achieved its growth target of 5 percent last year. It was positive news for both domestic growth and consumption and the global economy since the world's second-largest economy continues to be an international driver, contributing approximately 30 percent to global growth.

The most important feature of China's economic governance model, characterized by its rapid response and adaptation to the changing economic landscape, was again evident. In response to the negative economic news in the middle of last year, the government swiftly introduced a series of critical economic stimulus measures. These measures included lowering lending rates, bank reserve ratios and a substantial fiscal package of 10 trillion yuan ($1.38 trillion) to address local government debt problems.

Last year, the authorities announced the introduction of an even more proactive fiscal and moderately accommodative monetary policy. These policies were expected to enhance unconventional counter-cyclical adjustments and stimulate domestic demand. The Ministry of Finance stated that in 2025, the country would considerably increase its fiscal deficit and issue more government bonds, including super-long treasury bonds and special local government bonds.

Although 2025 has long been anticipated to be a challenging year, its first month has brought significant, albeit expected, negative news. The Trump administration has imposed an additional 10 percent tariff on all Chinese imports. The country will find it increasingly difficult to sustain its exports in a more stringent environment. While Chinese exporters have long concentrated on emerging markets, ensuring the same level of demand as that of North America and Europe will not be easy.

It is well known that the country aims to maintain economic growth at approximately 5 percent this year. Beijing must take bold measures to enhance support for the private sector, deregulate the economy and strengthen engagement with emerging markets to achieve this objective.

The private sector, which serves as the backbone of China's economic development, accounts for over half of tax revenue, 60 percent of GDP and roughly 80 percent of the workforce and will play a crucial role in further stimulating the economy.

Considering this year's new and more complex realities, China is taking suitable measures to encourage the growth of private enterprises. On February 17, a special symposium on private enterprises was held to support private businesses. Chinese President Xi Jinping attended the meeting and delivered a speech after hearing from representatives of those enterprises.

The symposium, the first of its kind hosted since 2018, takes place amid the complexities of global emerging economic challenges, including heightened geopolitical tensions and regulatory overreach against some of the country's corporate giants.

President Xi informed China's leading entrepreneurs that the government's core principles and policies for developing the private economy would be consistently upheld and implemented. "They cannot and will not be changed," he stated. He emphasized that the current difficulties and challenges facing the private sector are partial and temporary rather than holistic and long-term, and "they can be overcome."  He also mentioned that this is an opportune moment for private enterprises and entrepreneurs to showcase their talents and significantly contribute to the country's development.

The symposium emerged when the artificial intelligence (AI) platform Deep Seek revolutionized and sparked investor speculation about the potential for AI to enhance China's entire tech sector, leading to calls for an upward revaluation of Chinese assets. The Hang Seng Tech Index, which measures 30 of the largest technology companies listed on the Hong Kong Stock Exchange, has risen by 24 percent since the beginning of the year.

Attaining self-sufficiency in semiconductors and aiming for the country to leverage AI to stimulate economic development is vital for China. Chip export controls imposed by Washington understandably impede China's initiatives. Consequently, China requires capable and dynamic tech companies to compete technologically with the U.S.

What is certain is that the symposium communicates a clear message of support for private sector entrepreneurs at the highest level, which will inspire much-needed spirit and optimism for renewed growth in China, particularly in its tech sector. Those who understand the complexities of Chinese policy might deduce that this communication could act as an even more significant moral stimulus than fiscal or monetary support. The meeting with such a distinctive composition could signify a crucial turning point for China's tech sector and leading global companies following years of regulatory overhang.

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