Chinese President Xi Jinping delivered a speech at a rare closed-door symposium with prominent entrepreneurs on Monday, state news outlet Xinhua reported, urging entrepreneurs to “show their talents” in a “new era” for the nation’s businesses.
“The new era and new journey have broad prospects for the development of the private economy and great potential,” he said, according to a Google-translated Xinhua report. “It is time for private enterprises and private entrepreneurs to show their talents.”
He added that China must “unify our thinking, strengthen our confidence and promote the healthy and high-quality development of the private economy,” while downplaying the sector’s current financial challenges as temporary, local, in the process of being reformed.
“We must focus on solving the problem of arrears of accounts owed to private enterprises. We must strengthen law enforcement supervision, focus on rectifying random charges, fines, inspections, and seizures, and effectively protect the legitimate rights and interests of private enterprises and private entrepreneurs in accordance with the law,” he said, according to the report, calling for a “clean relationship between government and business.”
It comes amid concerns over the impact of the Beijing administration on Chinese businesses and their relative autonomy. The government has also been instrumental in supporting growth in recent months, through a spate of stimulus steps undertaken to revive the lethargy of an economy internally weighed down by lackluster domestic consumption and an extensive real estate slump.
The Monday call to strengthen “confidence in development” also takes place at a time of looming U.S. tariffs and rising tech rivalry with the world’s largest economy. The tech battle came into spotlight after Chinese startup DeepSeek’s late-January release of its revolutionary AI that claims to compete with current models for a substantively smaller training cost. DeepSeek founder Liang Wenfeng was one of the businessmen in attendance at the event.
During his Monday address, Xi stressed that China must “strive to promote scientific and technological innovation,” among other goals.
The Chinese leader’s presence at the symposium sends a “very clear signal of top-level support” to entrepreneurs, Peiqian Liu, Asia economist at Fidelity International told CNBC, “this will likely reignite the animal spirit and optimism about renewed growth momentum in China.”
“It could potentially be even more powerful than fiscal stimulus, should policymakers show more decisive support towards the development of tech sector in China,” Liu added.
The meeting could mark “a symbolic turning point for Chinese tech sector after years of heightened scrutiny,” said Lynn Song, chief economist at LNG, emphasizing the timing of this meeting underscored Beijing’s urgency to cheer up the private sector amid economic malaise and external tariff risks.
It could mean that “the regulatory overhang that we have had for the past two years or so is at an end,” said Andy Maynard, managing director and head of equities at China Renaissance.
Separately, state media CGTN reported that Chinese lawmakers were “deliberating a draft of the country’s first basic law focused on private sector growth.”
“The law will be of great significance for further optimizing the development environment for the private sector and driving high-quality growth,” according to the report.
It stressed that the private sector contributed for more than 60% of China’s GDP, 48.6% of foreign trade, 56.5% of fixed-asset investment, 59.6% of tax revenue and more than 80% of urban employment.
“The fast-growing sector has played a significant role in promoting technological innovations and stabilizing economic growth,” the report said.
Alibaba’s founder Jack Ma was among the entrepreneurs present at the meeting, according to a video clip released by Chinese state media.
The outspoken businessman has mostly stayed out of the public eye since Chinese authorities scuttled a blockbuster initial public offering of Alibaba Group affiliate Ant Group in November 2020, after his public criticism of the country’s regulatory system enraged Beijing.
Other entrepreneurs who attended the meeting included Ren Zhengfei, founder and chief executive officer of Huawei Technologies, Lei Jun, founder and CEO of consumer electronics maker Xiaomi Corp, Wang Xing, founder of food delivery giant Meituan, along with heads of automaker BYD and battery maker Contemporary Amperex Technology Co.
“You can never underestimate the power of such a meeting” in simply restoring the confidence of Chinese entrepreneurs, who had been treading cautiously to not “step on the wrong foot or head down a path that may be something that [Beijing] doesn’t like,” said Sam Radwan, founder of consultancy firm Enhance International.
Beijing kicked off a regulatory storm against the country’s large technology companies in late 2020 over concerns that they were growing too large and powerful.
While the symposium may not signify “a 180-degree turn” in China’s control over the direction of its economic policy, it does reflect Beijing’s recognition of the significant role that China’s private sector can play in supporting growth and boosting technological capabilities amid tightening restrictions by Western nations, Alfredo Montufar-Helu, head of China Center at think tank The Conference Board, told CNBC.
Mainland China’s CSI 300 index was little changed following the news.
The Hang Seng tech index, which had jumped over 5% Friday on media reports of the meeting, widened losses to drop over 2% following the meeting.
Source: CNBC