China’s private firms stuck between a rock and a hard place with Beijing’s support measures ‘mere lip service’

The private economy contributes more than half of China’s tax revenues, more than 60 per cent of its gross domestic product and more than 80 per cent of its urban jobs

But despite various action plans and support packages, a survey by an independent enterprise research institute shows China’s private sector is still in a difficult situation

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The private economy contributes more than half of China’s tax revenue, more than 60 per cent of its gross domestic product and more than 80 per cent of urban employment. Photo: AP

Published: 10:00am, 16 Dec 2023

China’s private firms are still finding themselves stuck between a rock and a hard place, with their confidence sapped due to a hostile business environment and a bleak outlook, despite scores of government supportive measures, according to a survey from an independent enterprise research institute.

Of the businesses surveyed by Beijing Dacheng, 85 per cent said China’s private sector was in a difficult situation, while only 22.5 per cent reported plans to increase investment in the next two years, according to the results published on Tuesday.

The survey, which collected results from 40 private entrepreneurs in November, is a rare insight into the dire predicament of China’s private sector as Beijing’s 31-point action plan has failed to reverse market expectations.

The package plan, released in July, was seen as Beijing’s strongest message ever to shore up sentiment and provide a favourable environment to China’s private sector, with a focus on economic growth, jobs and technological innovation.

These measures have not been effectively put into place, and remained mere lip service

Beijing Dacheng survey

But 70 per cent of the surveyed firms said the business environment in China remained unchanged or had even deteriorated after the plan was released.

“These measures have not been effectively put into place, and remained mere lip service,” the survey said.

During the tone-setting central economic work conference this week, China vowed to “promote the development and growth of private enterprises, put into place a batch of measures related to market access, resource acquisition, fair law enforcement and rights protection,” according to a statement released by the official Xinhua News Agency following the tone-setting meeting.