China Daily Global Edition (USA)
Private sector needs the public’s help
The COVID-19 pandemic has had a huge impact on a vast number of private enterprises, especially small and medium-sized enterprises. Yet the private enterprises can use the chance of the lifting of the strict antiCOVID measures to promote innovation and expand their businesses in order to overcome the impact of the pandemic. And the authorities, on their part, should create a favorable environment for private enterprises to thrive.
First, one of the impacts of the pandemic was the rapid decline in demand and a change in the demand structure. The pandemic also disrupted global supply chains, affecting Chinese private companies in particular.
Second, the blind pursuit of economic development resulted in overcapacity in low-end products, causing some structural problems.
And third, because of their smooth sailing since the launch of reform and opening-up, many private enterprises didn’t develop enough crisis awareness and hence didn’t know how to deal with emergencies like the COVID-19 pandemic.
Such impacts, however, are temporary, and China’s private sector still has a promising future. Also, despite the strict prevention and control measures, enterprises across the country had resumed production
by the middle or toward the end of 2020. That’s why while countries around the world were struggling to contain the spread of the novel coronavirus, China had resumed economic activities.
Besides, private SMEs are in a relatively good position to intensify business activities as the economy recovers, simply because China’s socialist market economy allows the market to play a decisive role in the allocation of resources with the government taking effective measures, including implementing favorable policies, to boost growth.
Given the present economic climate, private entrepreneurs should have confidence in the socialist market economy and respond to the challenges. The socialist market economy allocates resources — which are limited — more reasonably and efficiently, and defuse the bubbles in different sectors during an economic downturn. In particular, it can direct the resources to more efficient industries, and thus ensure the laggards are weeded out of the market in the overall interest of society.
Fair competition inspires people to use creative, and yet honest, means to succeed in the market. So entrepreneurs should use tough competition as an opportunity and rise to the challenge. Big, successful enterprises were not built in a day. They all went through struggles, and ups and downs, before achieving success. So entrepreneurs can’t hope to enjoy the benefits of the market without facing competition.
Socialism with Chinese characteristics has entered a new era, so has China’s economy. China has replaced the quantitative growth model with a high-quality development model. This change, along with the impact of the pandemic, will lead to restructuring of industries and supply chains. Private companies should use this as an opportunity for industrial upgrading.
Moreover, an economic downturn could also turn a “crisis” into an “opportunity” to promote innovation, which incidentally can help China achieve sustainable development. As for enterprises, especially
SMEs, they should use the government’s policies to boost their businesses.
To ensure that the private sector thrives, the government should fully implement favorable policies, ease the burden on private businesses and make financing more easily available to the SMEs. The government should also remove the obstacles preventing the resumption of work and production, because something obstructing even just one link of the supply or industry chains will affect their overall efficiency.
It is also significant to boost domestic demand, which in turn will boost economic growth as well as make up for the shortcomings in the industry chains. Demand is shrinking in China because of the rise in unemployment and decline in incomes. To address the problem and increase consumption, the authorities should take measures to spur investment and issue consumption coupons.
Also, to help private enterprises to thrive, it is necessary to create a good environment, an environment in which production and transaction costs are relatively low, public services are good, social resources are accessible, private property rights are protected, infrastructure is developed, and innovation is appreciated and promoted. After all, a good business environment can produce thousands of entrepreneurs, and thousands of entrepreneurs can help improve the business environment.