Growing the Private Sector

The 20th National Congress of the Communist Party of China (CPC) set out a grand blueprint for building a modern socialist country in all respects, elucidated the central task of advancing the rejuvenation of the Chinese nation through a Chinese path to modernization, and explained the important decision to “facilitate the growth of the private sector.” At the 2022 Central Economic Work Conference, President Xi Jinping emphasized the need to encourage and support the strong development of the private sector and private enterprises by formulating policies and cultivating a public opinion environment favorable to their development. 

I. The important role of the private sector in building a modern socialist country

It has been a consistent policy of the CPC Central Committee to support the development of private companies. The Central Committee, departments of the State Council, CPC committees and governments at all levels have, over the years, introduced policies and measures regarding market entry, the business environment, tax and fee reductions, and financing support that have facilitated the strong growth of the private sector and private enterprises. The number of private enterprises in China went up from nearly 11 million in 2012 to over 47 million by 2022, a more than four-fold increase in a decade. Over 80% of national-level enterprises classed as “little giants,” which specialize in sophisticated technologies to produce novel and unique products, are private. China already has over 3,000 listed private enterprises, and the number of Chinese private companies in the Fortune 500 leapt from five in 2012 to 28 in 2022.

During more than 40 years of reform and opening up, guided by the CPC’s principles and policies, the Chinese private sector has grown in size and strength, and it now accounts for over 50% of tax revenue, over 60% of GDP, over 70% of technological innovation, over 80% of urban employment, and over 90% of the total number of enterprises. Since the 18th CPC National Congress held in 2012, private enterprises have applied the new development philosophy, proactively implemented supply-side structural reform and major national strategies, and contributed to the coordinated containment of Covid-19 and economic and social development. In addition to reaching new heights in terms of scale and capacity, they have also rapidly shifted toward the pursuit of high-quality development. Our economic development has produced the Chinese miracle, enabled victory in the battle against poverty, built a moderately prosperous society, and accomplished the First Centenary Goal, and the private sector and private businesspeople have been integral to these achievements. On the new journey, as we write a new chapter in the Chinese miracle, the tasks will be tougher and the need to foster private sector growth will be greater in order to inspire the drive and dynamism of private entrepreneurs to innovate, build businesses, and create.

Without solid material and technological foundations, our principal task of building a great modern socialist country will not be possible. High-quality development lies at the heart of building a modern socialist country. To attain a high level of self-reliance in science and technology and a high standard of opening up, improve the quality of and suitably grow our economy, and quickly establish a new development dynamic, we must continue to develop the private sector and encourage the growth of outstanding private enterprises that are internationally competitive.  

In terms of institutional guarantees for modernizing China’s system of and capacity for governance, elements of the basic socialist economic system—including public ownership playing the dominant role while ownership in multiple forms develop side by side, distribution according to work being the mainstay while distribution in other forms exist alongside, and the socialist market economy—are great innovations of the CPC and the Chinese people. They are also important pillars of the system of socialism with Chinese characteristics and clear strengths for China’s national institutions and governance system. As an inherent part of China’s economic system, the private sector will always be a vital foundation for upholding and developing Chinese socialism, and it will always be an important force which the CPC must unite and rely upon as it governs long-term.

An employee at the workshop of a private enterprise in Leidian Town, located in Zhejiang Province, rushes to fill an order for special precision steel strips, January 1, 2023, ensuring a successful start to the new year. The private sector is an important force for promoting growth and stability in the economy. PEOPLE’S DAILY / PHOTO BY WANG SHUCHENG

II. Guiding the development of the private sector on the new journey to build a modern socialist country

The 20th CPC National Congress held in October 2022 succinctly summarized the distinctive Chinese features of modernization and elucidated the essential requirements, thereby providing the basis for making plans and arrangements for building a modern socialist country. The Central Economic Work Conference made comprehensive arrangements for this year’s economic work. The All-China Federation of Industry and Commerce (ACFIC) will focus on guiding private enterprises and private businesspeople to thoroughly understand the Chinese characteristics and essential requirements of Chinese modernization, fully and faithfully implement the new development philosophy, and observe major trends and keep on the right track. We will also give play to our strengths and shore up weaknesses so that we move forward soundly and steadily and make due contributions toward building a modern socialist country. 

Employees of a private enterprise in Henan Province weld component parts for electricity pylons for the Wuhan-Nanchang UHV transmission project, January 6, 2023. Private enterprises are both “reservoirs” and “anchors” for employment. PEOPLE’S DAILY / PHOTO BY ZHAO YONGTAO

We will uphold innovation-driven development and accelerate high-quality development.

Innovation is the primary driver of growth. The 20th CPC National Congress emphasized that innovation will remain at the heart of China’s entire modernization drive. It proposed strengthening closer enterprise-led collaboration between industries, universities, and research institutes, reinforcing the principal role of enterprises in scientific and technological innovation, and giving full play to the guiding and supporting role of key high-tech enterprises. The Central Economic Work Conference emphasized the need to transform and upgrade traditional industries and cultivate strategic emerging industries, focus on shoring up weaknesses in industrial chains, and create new industry competitive advantages in the process of achieving the peak carbon and carbon neutrality goals. All of this provides clear guidance on the innovation and development of private enterprises. The ACFIC will guide private enterprises to take the path of innovation-driven development, seize opportunities in digitalization and the development of smart and network-based technologies, adapt to the shift toward green development, grasp the trend toward standardization in development, and foster the creation of new development arenas and new competitive advantages. In the process of guiding enterprise growth, we will help to bolster the material foundation for modernization and consolidate the material conditions for people’s happiness.

We will practice the people-centered philosophy of development and strive to promote common prosperity.

Upholding the people-centered philosophy of development is a major principle that we must adhere to in order to build a modern socialist country. The 20th CPC National Congress pointed out that Chinese modernization is the modernization of common prosperity for all and stressed the need to advance rural revitalization, promote coordinated regional development, improve the system of income distribution, and implement the employment-first strategy. The Central Economic Work Conference made arrangements for the thorough and effective application of the employment-first policy and comprehensive rural revitalization. Private enterprises and entrepreneurs are not just beneficiaries but also practitioners of the great cause of advancing common prosperity. The ACFIC will guide private businesspeople to practice the people-centered philosophy of development, focus on helping to shrink gaps in urban and rural development, regional development, and income distribution, and uphold the idea of some becoming prosperous first and then helping others to prosper. We will encourage them to improve the mechanisms for reasonable increases in employee wages, engage with national strategies and regional development strategies, and dedicate themselves to rural revitalization and the Guangcai Program, which aims to unite private entrepreneurs and encourage them to repay society by helping poor areas to alleviate poverty and promoting common prosperity through project investment. We will also urge them to support charitable causes, act as leaders in becoming prosperous through diligent work, legitimate business activities, and entrepreneurship, and help to make development more balanced, coordinated, and inclusive.

Diners eat at the Tianhai Night Market in Lhasa, Xizang (Tibet) Autonomous Region, January 10, 2023. Private enterprises constitute a major force powering China’s domestic trade flows. PHOTO BY XINHUA REPORTER ZHOU DIXIAO

We will improve the international competitiveness of enterprises and participate in high-standard opening up.

High-standard opening up is an inevitable requirement and important prerequisite for creating a new development dynamic. The 20th CPC National Congress emphasized steadily expanding institutional opening up with regard to rules, regulations, management, and standards, promoting the high-quality development of the Belt and Road Initiative, and being deeply involved in the global industrial division of labor and cooperation. The Central Economic Work Conference mentioned furthering high-standard opening up and improving the level and quality of trade and investment cooperation. These arrangements are certain to provide greater scope for private enterprises to go global. The ACFIC will encourage private enterprises to root themselves in China and set their sights on the world, supporting and serving enterprises to participate in the global industrial division of labor and resource allocations and to take part in high-quality Belt and Road cooperation. We will assist them to tap into international demand, adapt to international rules, shape international standards, and open up international markets, as well as to improve the international competitiveness and reputation of Chinese products, manufacturing, and brands, and effectively convey China’s ideas to the world through economic and trade exchanges and mutually beneficial cooperation, thereby contributing to the world’s common prosperity and peaceful development. 

We will champion entrepreneurship and foster a positive Chinese business culture.

Market vitality comes from people, especially from entrepreneurs, and from an entrepreneurial spirit. The 20th CPC National Congress emphasized the need to encourage entrepreneurship and facilitate the healthy development of the non-public sector and those working in the sector. The Central Economic Work Conference further stressed supporting entrepreneurs to build businesses and encouraging entrepreneurship. The ACFIC will guide private businesspeople to strengthen self-study, self-education, and self-improvement and to love their country, love the people, and love the Party. We will guide them to practice core socialist values, advocate entrepreneurship, and encourage an ethos of attending to obligations and interests, with primacy given to the former, and of always pursuing self-improvement and striving toward perfection. We will guide them to strive to be models of patriotism and professionalism, of legally compliant business operations, of entrepreneurialism and innovation, and of giving back to society, thereby making a positive contribution to fostering a good Chinese business culture. 

We will accelerate the shift to green and low-carbon development and promote the building of a Beautiful China.

Promoting the shift to green and low-carbon socioeconomic development is crucial to achieving high-quality development. The 20th CPC National Congress emphasized accelerating the transition to a model of green development and intensifying pollution prevention and control. The Central Economic Work Conference proposed driving the green transformation of economic and social development and making concerted efforts to cut carbon emissions, reduce pollution, expand green development, and pursue economic growth. The ACFIC will guide private enterprises to incorporate green development into their long-term strategies, assimilate green development and conservation into their own corporate cultures, and swiftly integrate into and build green industrial chains. We will formulate incentives and constraints for enterprises to reduce pollution and carbon emissions and guide private companies to utilize green finance support policies, accelerate R&D on green and low-carbon technologies and products, and participate in pollution prevention and control to help achieve the peak carbon and carbon neutrality goals, thereby contributing to building a Beautiful China. 

(Originally appeared in Qiushi Journal, Chinese edition, No. 4, 2023)