Call to tell difference between entrepreneurs and capitalists

As business confidence reaches new lows and a law to support the mainland’s private firms works its way through the system, scholars have called on the government and Communist Party to formally differentiate “entrepreneurs” from “capitalists” to provide theoretical backing for a resurgence of the non-state sector.

The proposed change comes in response to a perceived ideological bias against millions of business owners – particularly billionaires – with some going so far as to call for the elimination of private ownership outright.

Concerns were amplified when Beijing took action to curb what it termed the “disorderly expansion of capital” as part of its campaign for “common prosperity”, a reorientation of the economy towards a more equitable distribution of wealth.

The term “capitalist” holds derogatory connotations in China, an officially socialist country whose constitution upholds public ownership as the “mainstay” of the economic hierarchy.

While private property rights were enshrined in a 2004 amendment to the country’s founding document, the non-state sector has remained relegated to a supporting role.

In a recent book, Views on

China’s Private Economy, economists Teng Tai and Zhang Haibing argued private business owners were not “capitalists” as theorised by Karl Marx. Instead, they said, entrepreneurs were “enterprise managers, innovators, investors, the final risk bearers of enterprises and socialist builders”.

At a subsequent symposium held for the book’s release in midApril, several economists and advisers agreed with the duo’s sentiments, calling for unleashing the “entrepreneurial spirit” that drove China’s economic boom without applying labels to those leading the charge.

China needed to draw a line between entrepreneurs and capitalists, said policy adviser Liu Shijin at the symposium, as it “transforms from high-speed growth to high-quality development”, a time when “innovation driven by entrepreneurship is more important than ever”.

Instead of being tarred as capitalists – which is associated with exploitation, greed and ruthlessness under orthodox formulations of Marxism – Chinese entrepreneurs deserved respect for their ability to make effective use of various resources including capital, said Liu, a former deputy director at the Development Research Centre of the State Council, China’s cabinet.

Despite issuing a number of supportive policies for the private economy over the years, China needed “major theoretical and policy breakthroughs” to ensure a free and fair environment for all businesses, he said.

Besides not conflating entrepreneurs with capitalists, the country should also cease the practice of categorising businesses by ownership entirely, Liu said, which in his view prompted different policies for different divisions and led to inequality.

China’s top legislature said on Wednesday that the making of a law promoting the private economy was on its agenda for 2024.

Drafting work was launched earlier this year, with business representatives and academics summoned for a gathering in February to solicit advice as the world’s second-largest economy, faced with a structural slowdown, looks to boost confidence.

Meanwhile, the long-awaited third plenum of the Communist Party’s Central Committee – a major political meeting expected to lay out Beijing’s economic strategy for the next several years – will be held in July.

Though Beijing had repeatedly pledged the private sector would be treated on equal footing with its state-owned counterpart, doubts persisted over its status, said Huang Wenfu, former chief editor of China Business Times, at the book launch symposium. One important reason, he said, was a weak theoretical basis.

Without a firm consensus, he said, “many of us have had a complicated, discriminatory, or distorted understanding of the private economy”.

Private firms have been the engine of China’s rapid growth since the era of reform and opening up began four decades ago. They now contribute to more than half of China’s tax revenues, over 60 per cent of its gross domestic product and more than 80 per cent of its urban employment.

Many of us have had a complicated, discriminatory understanding of the private economy HUANG WENFU, EX-CHINA BUSINESS TIMES