Guideline: Private firms key economic driving force

China issued a guideline on Wednesday for promoting the development of the private sector, signaling the latest push for supporting and reinvigorating a key sector in order to revive economic recovery amid downward pressures.

The guidance, which details 31 measures such as supporting private enterprises' access to funding, reducing market entry barriers and promoting fair competition, marks a key step toward promoting the healthy and high-quality development of the private sector, said experts and executives.

China has also pledged efforts to protect private enterprises' property rights and the rights and interests of entrepreneurs in accordance with the law, and support platform companies' development to generate jobs and spur consumption, according to the document released by the Communist Party of China Central Committee and the State Council.

Experts and private businesspeople believe the document is part of the package of measures to revive the economy hurt by the "scarring effects" of COVID-19 and challenges from a more complicated external environment, which will also help boost market confidence as well as stabilize expectations and the overall economy.

Li Zhaoqian, a member of the 14th National Committee of the Chinese People's Political Consultative Conference, said China has set out a detailed plan covering fields such as the development environment, the policy environment, legal protection, high-quality development and public opinion.

It signals China's latest top-level design for boosting the development of the private sector after the country released a guideline to foster a better environment to support the reform and development of private enterprises in 2019, he added.

According to the document, the private sector serves as a vital force in advancing Chinese modernization and building China into a great modern socialist country in all respects, and the country seeks to foster healthy and high-quality development of the private sector.

Li, who is also former vice-chairman of the All-China Federation of Industry and Commerce, said the new guideline sends a strong signal that the country will provide long-term and systematic institutional support for the private sector.

It will significantly stabilize expectations and boost the confidence of private businesspeople, Li said.

Private firms, a key driving force behind China's economic ascent during the past decades, contribute more than 60 percent of gross domestic product, 70 percent of technological innovation, and 80 percent of urban employment, official data showed.

Tian Xuan, associate dean of Tsinghua University's PBC School of Finance, said the healthy development of the private sector, especially small and medium-sized enterprises, plays a key role in keeping the economy dynamic and boosting innovation and entrepreneurship, serving as a driving force for shoring up activity and stabilizing the overall economy.

Tian said that private companies currently face issues such as a lack of funding and weakening confidence, and the document has mapped out detailed steps to tackle problems faced by the private sector.

China will meet private companies' demand for talent and workforce, support qualified private companies to go public to seek financing and refinancing, encourage the innovative development of the platform economy and continuously optimize the system for protecting intellectual property, the document said.

Looking forward, Tian urged more detailed steps to further stabilize market expectations, create a better business environment and build a market-oriented policy implementation system to stimulate market vitality.

Private businesspeople hailed steps mapped out by the document on boosting support for the private sector, expressing strong confidence in future development and growth.

Lei Jun, founder, chairman and CEO of Chinese smartphone vendor Xiaomi Corp, said measures such as supporting technological innovation and speeding up digital and technological transformation will help boost the high-quality development of the private sector, and Xiaomi will be dedicated to contributing to the development of the real economy.

According to the document, more efforts will also be made to encourage private enterprises to increase spending on research and development and make key technological breakthroughs, speed up the digital and technological transformation, encourage private companies' expansion of overseas business, and guide public opinion to create a supportive environment for the private sector.

Citing key steps mapped out by the document like promoting the development of platform economy, Pony Ma, chairman and CEO of Chinese internet heavyweight Tencent Holdings, said the guideline has significantly stabilized market expectations and boosted the confidence of platform companies including Tencent.

"We will continue to develop consumer internet business to create new drivers and expand domestic demand, strengthen the role of industrial internet business in boosting innovation for the construction of a modern industrial system, and continuously expand our business in the overseas market."