China Briefing | China’s vow to help private firms is plausible – but desperate, too
- President Xi Jinping’s promises to entrepreneurs may sound all too familiar but there is reason to believe that this time, he will try to deliver. Even so, plans to bail out highly leveraged private firms create a moral hazard
For China’s private firms, which have long been resigned to their fate as second-class citizens compared with state-owned enterprises, the Chinese government’s offers of help over the past 40 years have tended to be more rhetoric than concrete action. But its latest effort to help – so intense, and also so desperate – is very much different.
It is true that the bulk of his speech – broadcast prominently on prime time television news and the subject of countless commentaries on state media since then – may have sounded all too familiar to speeches heard so many times over the past few years.
Xi promised that the government would take effective steps to help private firms by reducing their tax burdens, expanding their access to bank loans and capital markets, creating a level playing field, stopping various discriminatory practices, and protecting private businessmen’s personal safety and their property rights.
But there are good reasons to believe that this time he will try very hard to deliver at least some of his promises – as demonstrated by a flurry of official activity from the central government to the local authorities over the past two weeks.