President Xi Jinping has sent a strong message to the nation’s private sector amid rising concerns about the government’s oversight intentions, declaring that they can develop their businesses “boldly and with confidence”.
“We encourage the development of private businesses. When they encounter difficulties, the [Chinese Communist] Party and the state will support them. And when confusion arises, guidance will be offered, with the hope that they can develop boldly and with confidence,” Xi said on Monday during his trip to the southern Guangxi Zhuang autonomous region.
To that end, during his visit to a food-processing centre in the city of Liuzhou, Xi conceded that it was no easy task developing small rice-noodle operations into such a large and vibrant industry there, the official Xinhua reported.
Xi’s message came at a time when the party has ramped up control over the countries’ millions of private firms, in an effort to exert greater state influence over economic development. But this has triggered anxiety and concerns among many business owners in the private sector.
The private sector is critically important to China’s economy, accounting for half of the country’s tax revenue, 60 per cent of its gross domestic product (GDP), and 80 per cent of urban employment. But in recent years, there has been a growing perception that the Communist Party strongly favours the state sector as the cornerstone of the economy.
Beijing’s recent moves to rein in the nation’s burgeoning tech sector – forcing Ant Group to abandon its planned US$34 billion initial public stock offering in Shanghai and Hong Kong and to restructure its financial technology business; fining Alibaba a record US$2.8 billion for antitrust violations; and initiating a new antitrust probe of food delivery giant Meituan this week – have grabbed the attention of the nation’s entrepreneurs amid questions of how far the government interventions will go.
Alibaba owns the South China Morning Post.
Last week, outspoken agriculture industry tycoon Sun Dawu was formally arrested on a number of charges, including illegal fundraising and “obstructing public service”, over a land dispute between his company and a state-owned farm. Before his formal arrest, Sun had been detained since November for “provoking quarrels and disrupting production”, and the government seized his company.
Last year, the General Office of the Communist Party’s Central Committee also released guidelines to “strengthen ideological guidance” and “create a core group of private sector leaders who can be relied upon during critical times”.
Also last year, Ren Zhiqiang, an outspoken real estate tycoon, was sentenced to 18 years in prison on corruption charges after criticising Xi’s handling of the coronavirus crisis.
On Monday, Xi sought to reassure private businesses of their role in helping achieve the nation’s economic development goals.
While visiting machinery manufacturer Guangxi Liugong Group in Guangxi, Xi reportedly said that only innovation can help the equipment manufacturing industry grow stronger, and that innovation is the only way for China to become a world-leading power.
High-quality development is the route that the Chinese economy must take during the 14th Five-Year Plan for the 2021-25 period, and the high-quality development of the equipment manufacturing industry is a top priority, Xi said.
The Chinese government has been calling for a transition from a focus on high-speed growth to a high-quality development model for a number of years. Beijing last year introduced its dual-circulation economic strategy, which puts a greater focus on the domestic market to drive future growth while adapting to challenges posed by an increasingly unstable and hostile outside world.
With Washington increasingly restricting Chinese firms’ access to US-made technology on national security grounds, and as the world’s two biggest economies clash over a range of issues such as trade, human rights and Taiwan, Beijing is ramping up efforts to build greater self-reliance in core technologies, including semiconductors and artificial intelligence.
But analysts have said that China’s deep integration in global technology supply chains will make it difficult for the country to develop all of the tech it needs from scratch.