The National Development and Reform Commissions (NDRC) of China announced the setting up of the “Private Economy Development Bureau” to coordinate and promote private economy on September 4th, 2023. This bureau, as a specialized agency, will shoulder the responsibility of “coordinating various policies in related areas and promoting the prompt and effective fulfillment of major initiatives of the central government." In fact, this move is to respond to the “Opinions of the State Council of the People’s Republic of China on Promoting the Growth and Development of the Private Economy,” released on July 14th, as one of the crucial measures to piece together the private economy and shore up national growth. Observing from China’s political practice, it is accustomed to setting up specialized agencies in response to special needs. However, the effectiveness that this Bureau might bring out is uncertain due to the existence of non-economic factors.
In recent years, the Chinese Communist Party (CCP) and government have kept sending favorable signals in dealing with economic difficulties and boosting confidence in the private economy based on the fundamental policies of reform and opening. For instance, in the Central Economic Work Conference at the end of 2022, there was an obvious change in its rigid stance of 2020. The policy changed from “strengthening anti-monopoly efforts and preventing capital from unregulated expansion,” to the advocacy for “vigorously developing digital economy, enhancing normal regulatory standard, and supporting platform enterprises to their full potentials in leading development, creating jobs, and standing out international competitions. Together with “seizing new opportunities when global industry is restructuring and readjusting, and boldly exploring new areas and triumphing in new fields.” Ma Yun (Jack Ma), founder of Alibaba group and an iconic figure of the private economy, returned to China in March. He showed up at Yungu School in Hangzhou where the headquarters of Alibaba group is located on March 27. Ma’s return was seen as an important indicator of China’s business environment after the lockdown and regulatory purge through the COVID-19 pandemic and it also tested the practice of “closing and clearing” pro-politics business initiated by Xi Jingping.
Obviously, the establishment of the Private Economy Development Bureau is a response to the “Opinions of the Central Committee of the Chinese Communist Party and the State Council on boosting the Growth and Development of the Private Economy,” issued on July 14th (hereinafter referred as the “Growth Opinion”). This move is more targeted and displays significant practical meanings, serving as a comprehensive guideline from the Central Committee of the CCP regarding various issues related to the private economy and private entrepreneur in recent years. The “Growth Opinion” explicitly states that the private economy is a vital force for advancing China’s modernization, an important foundation for high-quality development, and a key in achieving the second centenary goal of building a socialist modernized strong country. It also outlines specific policy measures, including continually exceling the development environment for the private economy, enhancing policy support for the private sector, strengthening the legal guarantee for private economic development, promoting high-quality development of the private economy, facilitating the healthy growth of private entrepreneurs, creating a supportive social atmosphere for the growth and development of the private economy, and enhancing organizational implementation.
In viewing the current special economic condition in China, the establishment of the Private Economy Development Bureau by the NDRC is clearly aimed at boosting the confidence of private enterprises and promoting the development of the private economy, thus ruling out difficulties of China’s economy. When studying the content of the “Growth Opinion;” however, it seems positive superficially but reflects long-existing issues in China’s private economy policies. The fact that private enterprises often need to undertake political tasks can cause institutional challenges, hindering the growth of the private economy.
Starting from 2008, the CCP has significantly increased its regulatory efforts in key industries such as automobiles, energy, power, and semiconductor. The surging expansion in size, resources, and influence of the internet industry has raised concerns of losing power control in the CCP, prompting its determination to rectify these industries and make them under the leadership of the Party. The Central Office of the CCP released the “Opinions on Strengthening United Front Work for the Private Economy in the New Era” (hereinafter referred as the “Opinions”) on September 15th, 2020. It is the first united front work document targeting at private enterprises since the economic reforms in 1978 but also a document that holds the private enterprises to undertake heavy political tasks thus leading to the lack of their confidence.
The “Opinions” has seriously impeded the active spirit of entrepreneurship by asking entrepreneurs to always keep political awareness and unswervingly listen to the Party and follow the Party. It calls for a dialectical unity by guiding private entrepreneurs to develop a sense of patriotism, to consider it their duties making contributions to the country through their industries, and to promote entrepreneurial and craftsman’s spirits. It also encourages private enterprises to actively fulfill their social responsibilities and participate in welfare and charitable activities. Xia Bin, a former counselor of the State Council and the honorary director of the Development Research Center of the State Council and the Institute of Finance, emphasized the urgent need to restore the confidence of entrepreneurs, private entrepreneurs in particular, in his article titled “Medium, and Long-Term Issus in the Chinese Economy: Three Key Areas of Concern” on September 15th, 2022. It shows CCP’s play of dual strategy by merging the hard approach of “Growth Opinion” guideline with the soft approach of “Opinions” united front work to the private enterprises. These actions reflect the objective reality that non-economic factors still exist in the current CCP’s party-state system leading to the stagnation of its economy.
（Huang Chiu-Lung, Associate Professor, Department of Public Security, Central Police University）
(Translated to English by Tracy Chou)
