China’s key private sector needs ‘continuity, stability’ to support economic recovery, but doubts remain

China’s 50 million private firms require a level of certainty and less interference if they are to fulfil their role as a key pillar for the country’s economic recovery, economists said, amid Beijing’s commitment to restoring business confidence after walking away from its zero-Covid policy.

The private sector provides employment for almost 30 per cent of the population, but has had to endure Beijing’s education and tech crackdowns.

Three years of China’s zero-Covid policy and Beijing’s push for so-called common prosperity have also taken their toll on the sector that is vital for social stability and economic growth, with more than 405 million people either working at private companies or self-employed in 2019.

“[We] have to give entrepreneurs assurance, reduce excessive intervention by local governments in micro markets and prevent a combination of errors,” Chinese economist Ren Zeping wrote in an article published on Tuesday.

“[We] need to understand the importance of entrepreneurship as a factor of production, and the government needs to maintain the continuity and stability of its policies to create stable expectations.”

China Evergrande Group’s former chief economist added that given the importance of the private economy in driving employment, promoting innovation and stimulating market vitality, concrete and effective measures are required.

The private sector is also expected to participate more extensively in China’s innovative technology industries, including IT, new energy vehicles, artificial intelligence and finance, with governmental support, according to Ren.