China will ‘unwaveringly’ back private sector but scrutiny to stay, Communist Party congress spokesman says
- All eyes are on the 20th party congress for signals on the way forward for a private sector hard-hit by the pandemic and regulatory crackdowns
- Party recognises positive role of capital but must prevent unregulated expansion, congress spokesman asserts on eve of event
China’s ruling Communist Party has vowed to continue to push for the development of the private sector, while highlighting the importance of increased market scrutiny.
As delegates gathered in Beijing for a pivotal twice-a-decade meeting, the party also reaffirmed its resolve to “unwaveringly” open up the market further to foreign investors and continue to improve the country’s business environment.
This comes as foreign investors and private entrepreneurs alike – hard-hit by nearly three years of strict zero-Covid measures – anxiously wait for policy signals from the 20th party congress. Starting on Sunday, the weeklong event is expected to introduce a new line-up of top leaders and help the nation set course for the next five years.
While repeatedly hailing the contribution of private firms to economic growth and jobs, decision makers in Beijing declared in late 2020 that curbing the “disorderly expansion of capital” was a top priority. The drive for “common prosperity” also rose up the political agenda last year.
But those policy moves softened in 2022, after the economy was buffeted by the coronavirus pandemic and successive regulatory efforts to rein in private capital, such as crackdowns on tech giants, off-campus tutoring firms, property developers and wealthy celebrities.
However, earlier this year President Xi Jinping still stressed the need to “regulate and guide the healthy development of all types of capital” with a “red and green” traffic light system, and urged tighter scrutiny of the market.
Curbs on unregulated capital expansion should not be seen as conflicting with facilitating sound development of the non-public sector, 20th congress spokesman Sun Yeli said.
“The private sector is an important part of the economic basis for upholding and developing socialism with Chinese characteristics. Entrepreneurs are an important force that the party must rally and rely on in the long term,” Sun said in response to a question from the Post.
He said the party fully recognised the positive role played by capital, but was also careful to stress the importance of correctly understanding and grasping the character and ways of capital movement and preventing unregulated expansion.
“That is why we have adopted a traffic light approach,” said Sun, who is also the party’s deputy propaganda chief.
“This doesn’t mean capital is to be rejected, but to rather aim for a sound and orderly market economy and healthy capital development under the legal framework. And this, we believe, will not hinder the growth of the private economy but actually be conducive to it.”
Resolutely developing the public sector as well as supporting the non-public sector had become a principal policy of the party and the country, Sun said.
“This has been written into the basic strategies for upholding and developing socialism with Chinese characteristics in the new era. This policy has not changed and will not change,” he said.
“China is a law-based country, state-owned and private capital, domestic and foreign investment are all protected by the law.”
He added that China would draw on good practices in other parts of the world, enhance regulation while boosting development, and continue to build a market-oriented and law-based business environment of international standards.
As the signs point to a slowing Chinese economy, Sun said the party would not take the speed of growth to be the only yardstick of performance but focus more on longer-term issues.
“The economy is moving towards higher quality and efficiency, more equality and greater sustainability and security,” he said.
The Covid-19 pandemic and the international environment had caused downward pressures on China’s economy, he noted, while pointing out that “effective and robust response measures” had been taken.
Going forward, China’s Covid-19 response measures would show greater precision and effectiveness, and even better coordination between pandemic response and social and economic development, he pledged.
Sun argued that making domestic circulation the mainstay of the “dual circulation” strategy did not mean shutting out the outside world. Instead, China was trying to better link the domestic and international markets by unlocking the potential of demand at home.
“Opening up is China’s basic state policy,” he said. “No matter how the world may change, China’s resolve and will to open up unwaveringly will grow stronger and deeper.”