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Frank Tang

Jane Cai

The Communist Party on Monday said it will support and protect entrepreneurs in the first such directive to safeguard China’s private business owners since it took power in 1949.
The guideline – issued by the Central Committee and State Council – praises China’s businesspeople for boosting national economic growth.
“Lots of entrepreneurs … have made a great contribution to the accumulation of social wealth, to job creation, economic and social development,” the directive says.
“The entrepreneurial spirit will play an important role in deepening supply-side structural reform, invigorating the market and achieving sustainable development of the economy and society.”
It also promises to protect their legitimate rights and interests, ensure fair market competition and strengthen protection of intellectual property rights.
China minister tells young Hong Kong entrepreneurs to seize mainland opportunities
Chinese economists say the directive is aimed at boosting private sector confidence in the business environment amid concerns over capital outflows and slowing investment growth, and worries about an overreliance on spending in the state sector.
The promises come at a time when the authorities are in dire need of more investment from the private sector to support growth, as many businesses move their wealth or production facilities outside the country.
Overall investment in China went up 7.8 per cent in the first eight months from a year earlier, according to the National Bureau of Statistics. State sector investment grew at 11.2 per cent, but investment growth from the private sector slowed to 6.4 per cent in that period. The rate was 6.9 per cent from January to July.
Meanwhile, capital outflows have persisted for 22 consecutive months to August, according to a widely watched indicator released by the central bank.
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“China’s economic growth can’t rely on government-led investment as it is unsustainable,” said Lu Zhengwei, chief economist at the Industrial Bank. “Private investment still has huge scope to grow.
“This is also a response to market calls for further reforms ahead of the party congress,” Lu said.

The private sector contributes more than 60 per cent of China’s gross domestic product and provides 80 per cent of jobs, according to the statistics bureau.
But intrusive state intervention in business and investment activities and a lack of rule of law to protect private assets is undermining confidence in China’s private sector, while a steady rise in interest rates and a lower business tax environment in the United States under President Donald Trump could tempt more Chinese firms to move their assets abroad.
“Entrepreneurs are losing confidence in the business environment in China, as we can see from the recent capital exodus,” said Zhang Lifan, a Beijing-based political commentator and historian. “They feel insecure. This policy is a gesture to win them over.”
China’s industrial northeast opens its doors wider to foreign investors
China’s political ruling class has had an on-again off-again attitude towards the country’s private business sector over the last seven decades. After Mao Zedong took power in 1949, the new regime set about confiscating assets from the bourgeoisie and forcing many private businesses to enter “public-private joint ventures”. Private entrepreneurship was wiped out in the ’60s and ’70s under a centralised command economy that took the country to the brink of collapse before Deng Xiaoping revived it with his liberalisation policy in the late ’70s. Jiang Zemin went further, allowing private capitalists to join the party in the 1990s – a major ideological breakthrough for the sector.
Many Chinese tycoons are among the richest people in the world, and the party is generous in giving honorary titles to loyal entrepreneurs – the parliament’s largely ceremonial advisory body counts a long list of billionaires as members.
At the same time, businesspeople often find themselves dependent on the whims of the authoritarian state and haunted by the so-called original sin – problems that emerged in the early days of the private sector.
Zhang Lin, a researcher with the Beijing-based independent think tank Unirule Institute of Economics, said the directive reflected growing concerns among the top leadership over the country’s excessive reliance on government spending and the state sector – and a need for more private business support for employment and economic growth in the long term.
“This guideline is an attempt at reassurance, or encouragement ... but there haven’t been any substantial policy adjustments and they’re not expected in the near future,” Zhang said.


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Beijing tries to win over entrepreneurs with praise and promises

A Communist Party flag – made of red scarves by students ahead of the party congress next month – is seen at a primary school in Shandong province. The party has vowed to protect the rights and interests of entrepreneurs. Photo: Reuters

A portrait of Mao Zedong hangs on Tiananmen Gate covered with netting and scaffolding during furbishing work in Beijing, Friday, Sept. 1, 2017. China said a key Chinese Communist Party meeting held once every five years will start on Oct. 18, marking the formal countdown to the gathering at which President Xi Jinping will begin his second five-year term as head of the ruling party. (AP Photo/Andy Wong)

China’s industrial northeast opens its doors wider to foreign investors

A man pulls a trolley at a car interior parts factory in the American Industrial Park in Shenyang. While foreign firms complain about being locked out of large swathes of China’s market, the door has opened a bit wider in Liaoning. Photo: AFP

In this picture taken on July 3, 2017 a man pulls a tricycle filled with recyclable goods on a street in Shenyang. While foreign firms complain about being locked out of large swathes of China's vast market, the door has cracked open a bit wider in Liaoning province as the authorities seek to revive the recession-hit industrial region. / AFP PHOTO / NICOLAS ASFOURI / TO GO WITH AFP STORY CHINA-ECONOMY-MANUFACTURING, FOCUS BY JOANNA CHIU

In this picture taken on July 4, 2017 elderly people play cards on a street in Shenyang. While foreign firms complain about being locked out of large swathes of China's vast market, the door has cracked open a bit wider in Liaoning province as the authorities seek to revive the recession-hit industrial region. / AFP PHOTO / NICOLAS ASFOURI / TO GO WITH AFP STORY CHINA-ECONOMY-MANUFACTURING, FOCUS BY JOANNA CHIU

In this picture taken on July 3, 2017 workers manipulate a machine to make car interior pieces for a major European car maker in the American Industrial Park in Shenyang. While foreign firms complain about being locked out of large swathes of China's vast market, the door has cracked open a bit wider in Liaoning province as the authorities seek to revive the recession-hit industrial region. / AFP PHOTO / NICOLAS ASFOURI / TO GO WITH AFP STORY CHINA-ECONOMY-MANUFACTURING, FOCUS BY JOANNA CHIU

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Communist Party recognises importance of ‘entrepreneurial spirit’ to national economy in first such directive since 1949


Beijing tries to win over entrepreneurs with praise and promises

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Communist Party recognises importance of ‘entrepreneurial spirit’ to national economy in first such directive since 1949

Communist Party recognises importance of ‘entrepreneurial spirit’ to national economy in first such directive since 1949