Eight Chinese ministries on Tuesday issued 28 measures to support the private economy, vowing to provide fair access for private firms to participate in major national projects and technological undertakings, increasing financial and land support, and strengthening legal protection of the private firms, sending another resounding signal that the country will further ratchet up support for the private sector.
The 28 measures on Tuesday came less than two weeks after the Communist Party of China Central Committee and the State Council issued a sweeping guideline on boosting the growth of the private economy on July 19. Such frequency underscores the country’s unwavering support for private enterprises, contrary to “crackdown” claims hyped by foreign media outlets, analysts said. The measures are timely and very targeted, as they aim to address thorniest challenges faced by the private sector, they noted.
The growing support for the private economy also come as China is moving swiftly to boost development of various aspects of the Chinese economy, including 20 measures released on Monday to boost consumption. With all the measures targeting main growth drivers in place, the Chinese economy will likely see a stable recovery in the second half of 2023, despite internal and external challenges, analysts said, stressing effective implementation of the measures is paramount for the policies to be effective.
Sweeping measures
The 28 measures were released in a notice issued Tuesday by eight ministerial agencies, including the National Development and Reform Commission (NDRC), the nation’s top economic planning agency, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Science and Technology and the People’s Bank of China (PBC), the central bank. The measures cover five areas: fair market access, stronger financial and land support, greater legal protection, better government services, and better business environment.
“The measures are very comprehensive, covering areas such as market access, incentive mechanism as well as encouragement for the private sector to participate in major projects in key areas,” Cao Heping, an economist at Pecking University, told the Global Times on Tuesday, noting that the measures are very detailed in its content, which allows local governments to better implement them and let all specific private companies to “feel the advantages brought by these policies.”
The ministries said a list of major national projects that are profitable and mature, in which private firms are encouraged to participate, will be formed. Also, the issuance of Real Estate Investment Trust products (REITs) for infrastructure projects will be increased, and qualified private firms will be encouraged to issue REITs, so as to boost private investment. A reserved quota of 40 percent for private firms in government procurement will be extended to the end of 2023.
Private firms will also be encouraged to participate in major science and technological projects and lead missions to tackle core sci-tech areas such as industrial software, cloud computing and artificial intelligence. The measures also include continuation of “green light” investment cases for the platform economy, a process through which authorities grant approval of certain investment deals of private internet platforms.
These measures are very significant, as they cover “areas where the private sector is very active and relatively competitive,” Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Tuesday, noting that measures in other areas such as legal protection and financial support are conducive to boosting the confidence of private entrepreneurs and investors, and promoting the overall recovery of the economy and employment.
In terms of financial support, the ministries said on Tuesday that they will offer private businesses easier process of tax reduction in research and development spending, shorter time in export rebates, and strengthened inclusive financial support. Also, more private firms will be qualified to issue bonds.
They also vowed strengthened legal protection for private firms, including greater efforts to pay up debts owed to private firms and the abolishment of regulations and official documents violating the principle of equality for enterprises of various types of ownership. The ministries also called for adjustments to land supply to meet private firms’ demand for land use.
Improved expectation
“I am very pleased to see this measure [about helping private firms’ land use] … This will address the biggest challenge our company is facing,” Xu Lingji, who owns an electric instrument set company in Hangzhou, East China’s Zhejiang Province, told the Global Times on Tuesday, noting that the measures are “very encouraging,” but she looks forward to more detailed implementation measures from local governments.
“The 28 measures are very swift and targeted,” Tian Yun, a Beijing-based economist, told the Global Times on Tuesday, noting that the measures included those aimed at tackling the thorniest challenges faced by private firms amid downward economic pressure, including delayed payments and declining orders. But Tian also noted that the thorough and efficient implementation of the measures by relevant departments and localities are crucial to ensure that the measures will help boost the private economy and stabilize overall economic operations.
“But in any case, this is a catalyst and a shot in the arm, which should offer some guarantee for the recovery of the private economy in the second half of the year,” Tian said.
The 28 measures are part of China’s increasing efforts to boost the ongoing economic recovery in the second half of 2023, amid internal and external downward pressure. Chinese officials and analysts have repeatedly said boosting consumption and the private sector is crucial in tackling downward pressure and ensuring a steady recovery.
That has been reflected in the latest policy decisions. A day before the measures were introduced, on Monday, the NDRC issued 20 measures to boost domestic consumption, including support for expanding real estate and auto sales.
“If the measures for both the private sector and consumption are thoroughly implemented, it should be no problem for GDP growth rates in the third and fourth quarter to exceed 5 percent,” Tian said, adding that fourth-quarter growth rate could be even faster and full-year growth rate could reach 5.5 percent, well above the official target of about 5 percent for 2023.
To help ensure a steady economic recovery in the second half of 2023, more stimulus measures could be introduced, including adjustments in monetary policies. During a press conference in mid-July, PBC officials said the central bank will use policy tools such as the reserve requirement ratio (RRR) and medium-term lending facility to tackle challenges facing the Chinese economy, raising expectations for an RRR cut or other measures.
Separately, on Tuesday, the PBC and four other ministries also issued a notice for expanding financial channels for micro, small and medium-sized businesses, vowing to take targeted and diversified financial support measures to help small businesses.
(Global Times)
