Christina Sadeler
As economic challenges loom, Chinese experts discuss their country’s private sector and how to boost its economy again. These voices broadly represent two groups – one that reflects current party policy with a high level of saliency in public discourse, and another, a well-established but now-marginalized cohort representing market-leaning reformers, aiming to address the crisis of confidence in the private sector. With the announcement of the CCP’s long-delayed third plenum that usually sets out China’s economic program for the next five years, now is a good time to take stock of these ongoing debates, ones that will not end after the major gathering in July.
The most recent quarterly economic data suggest a more stable growth after a difficult 2023. Still, major challenges affecting the sustainability of China’s economic system remain. These include a struggling real estate sector, piling local government debt, regional inequalities, and a decline of private sector investments in recent years.
The struggling private economy is an issue of concern for the Chinese leadership, given its relevance for economic growth, tax revenues, job creation, and not least for China’s innovation capacities. Compared to pre-Covid years, slowing growth has caused companies to face economic difficulties. So too, confidence of private entrepreneurs has been shaken and not just since the chaotic exit from China’s rigid zero-Covid policy at the end of 2022. The CCP under Xi Jinping has prioritized state-owned enterprises (SOEs), implemented stricter regulations, increased its control, cracked down on the tech-platform sector, mandated patriotism and coerced enterprises into making “donations” – a token gesture to achieve social and economic equality.
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