Private enterprises should not ‘exit the economy’
businesses, with a registered capital of 165 trillion yuan ($24 trillion; 20 trillion euros; £18.3 trillion). The private sector now accounts for more than 60 percent of China’s GDP.
True, State-owned enterprises enjoy some advantages when it comes to the industrial chain, capital and licensing. But the private sector embodies the entrepreneurial talent and spirit of the Chinese people. Its ability to adapt to market changes reflects its efficiency, which in turn helps the SOEs grow bigger and more powerful. As such, the forced demise of the private sector would lead to inefficient resource allocation, affecting the overall development of China’s economy.
The 18th National Congress of the CPC in late 2012 advocated that economic entities under various ownership should be guaranteed equal use of the factors of production according to law, fair participation in market competition and equal legal protection.
A year later, the Third Plenum of the 18th CPC Central Committee said that China, by and develop the public sector, and “unwaveringly” encourage, support and guide the development of the nonpublic sector.
He also reiterated the leadership’s “unchanged” attitude toward the nonpublic sector vis-a-vis the status and role of the nonpublic sector in China’s economic and social development; the policy of encouraging, supporting and guiding the development of the nonpublic sector; and the policy to create a favorable environment and create more opportunities for the development of the nonpublic economy.
These assurances have further boosted the confidence of private enterprises, encouraging them to play a vital role in China’s economic transformation and future development.
In a report delivered to the 19th Party Congress late last year, Xi said China must uphold and improve its basic socialist economic and distribution systems, reiterating the leadership’s “unwavering” stance. He also said the country will support the development of private enterprises, in an effort to achieve higher-quality and more efficient and sustainable development. Moreover, China has implemented a series of policy measures to encourage nongovernmental investment and promote the healthy development of entrepreneurs, which have helped create a fairer, more open and more relaxed environment for the development of the private economy.
China has an enormous productive force. But to increase productivity and promote the building of a community with a shared future for mankind, Chinese enterprises, both public and private, need to “go global”. As an important part of China’s economy, private enterprises can adapt to the rules and pace of economic globalization faster than the SOEs. Which means the private sector cannot and should not be allowed to die an unnatural and untimely death.
As such, the absurd argument of the controversial article should be seen more as political speculation than an insight into China’s economic reality.
They are not only crucial, but can also adapt to the rules and pace of economic globalization faster than China’s SOEs