China’s government has taken further steps to bolster the private economy by announcing 28 measures aimed at providing enhanced support for private firms. These measures were jointly issued by eight Chinese ministries, including the National Development and Reform Commission (NDRC), the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Science and Technology, and the People’s Bank of China (PBC).
The new measures aim to encourage private companies to participate in major national projects and key technological initiatives, improve access to financial and land support, strengthen legal protection for private firms, and create a more favorable business environment. The measures come as a follow-up to a recent guideline on boosting the growth of the private economy issued by the Communist Party of China Central Committee and the State Council on July 19.
Notably, private firms will have the opportunity to participate in major science and technological projects related to areas such as industrial software, cloud computing, and artificial intelligence. Additionally, the government will extend a reserved quota of 40% for private firms in government procurement until the end of 2023.
The financial support measures include offering easier processes for tax reduction in research and development spending and shorter timeframes for export rebates. Moreover, the authorities will strengthen inclusive financial support and expand the number of private firms qualified to issue bonds.
The move is seen as a response to internal and external challenges and reflects the government’s commitment to supporting the private sector’s role in the economic recovery. Analysts anticipate that the measures, if effectively implemented, will contribute to a stable economic recovery in the second half of 2023. China’s efforts to boost consumption and the private sector play a crucial role in stabilizing economic operations amid downward pressure.
These measures highlight China’s determination to support private enterprises despite claims by foreign media outlets suggesting a “crackdown.” To ensure a steady recovery, more stimulus measures, including adjustments in monetary policies, could be introduced, including a possible reserve requirement ratio (RRR) cut. Additionally, the People’s Bank of China (PBC) and four other ministries have issued a notice to expand financial channels for micro, small, and medium-sized businesses, demonstrating the government’s focus on providing targeted and diversified financial support to small businesses.