China ramps up support for private businesses

BEIJING, Feb. 27, 2023 /PRNewswire/ -- A news report from Beijing Review:

Mizhi, a county in the northwestern province of Shaanxi, is reputed to be a producer of high-quality millet, one of the oldest cultivated grains in the world. Farmers there have, in the past, been unable to find a market for their millet due to a lack of visibility. However, the emergence of e-commerce is helping them secure livelihoods from the crop.

"The purchasing price of local millet has doubled since 2016, when I started the business," Zhang Xiongbiao, founding General Manager of the Shaanxi Young Entrepreneurs League E-Commerce Co. Ltd., told Beijing Review.

Zhang started his business together with another 20 local young people, signing exclusive agreements with growers to purchase their millet and selling it through online channels. To date, Zhang's business has provided more than 6,000 households of growers with livelihoods, helping them increase their income and escape poverty.

Private businesses like Zhang's, which make up 90 percent of the number of market entities nationwide, have been playing an indispensable role in all aspects of China's social and economic development. They currently contribute more than 50 percent of the country's tax revenue, 60 percent of its GDP, 70 percent of technological innovation and 80 percent of urban employment.

"The private sector is the source of vitality for China's economic development," Yang Yiqing, Deputy Director of Zhejiang Businessman Research Institute, a think tank under Zhejiang Gongshang University, told Beijing Review. "To a great extent, it determines the growth potential of employment and consumption."

"At present, the most important thing is to lift market access restrictions on private investment and shore up the confidence of entrepreneurs to tide them over difficulties caused by the COVID-19 pandemic and shrinking exports and consumption," Yang said.

Central authorities have been reiterating the stance on providing an enabling environment for private enterprises and facilitating their growth to revitalize the economy.

It's never easy for private entrepreneurs to pursue careers. Zhang still remembers how hard it was to purchase new millet from growers in the first year of his company. "They were unwilling to sell new harvests as the millet of previous years remained unsold," he said. Worse still, Zhang, previously a designer, knew little about e-commerce and had to start from scratch. Even his offices were offered for free by the government at an e-commerce industrial park.

Things got better as e-commerce began to take off around the nation. The sector also received a boost from the government for its significant role in alleviating poverty and rural revitalization. Particularly, numerous live-commerce events on major e-commerce platforms and surging media reports have increased exposure for more agricultural product brands. Zhang has ridden the momentum and seized the opportunities as they have come along.

Then came the COVID-19 pandemic. Many places imposed movement restrictions to curb the spread of the virus, but they disrupted the nation's logistics industry. "Some customers were unwilling to wait for extended delivery times. We also had difficulties hiring new employees due to the restrictions," Zhang said.

Chinese authorities continued to send positive signals, emphasizing the need to consolidate and develop the public sector of the economy, and at the same time encourage, support and guide the development of private enterprises.

The Central Economic Work Conference in December 2022, which outlined priorities for the government's economic work in 2023, underlined law-based protection of the property rights of private enterprises and the interests of entrepreneurs.

Inspired by positive policy signals and optimized COVID-19 response measures, Zhang shows strong confidence toward the future.

"Our e-commerce business centered solely on millet sales at the beginning, but now we have set up a millet primary processing base and our own logistics networks," he said, adding he has invested 120 million yuan ($17.6 million) in infrastructure construction and upgrading.

"We're able to expand business activities and people are tending to consume more as pandemic controls have been eased, which indicates bright prospects," Zhang said.

Despite these advances, discussions on the relationship between government and private companies continue. China's efforts to regulate market order, such as rectifying chaos in the Internet and extracurricular tutoring industries, were misinterpreted by some as a crackdown on the private sector.

Yang believes "the dynamic balance between development and regulation is an art" and that pacing development is like riding a bicycle: Too fast is risky but too slow makes it easy to fall over.

"With clear and detailed rules and regulations, the government needs to create a law-based business environment, and enterprises should operate according to law," Song Xiangqing, Director of the Research Center for Industrial Economy at Beijing Normal University, told Beijing Review.

SOURCE Beijing Review