BEIJING – China on March 5 pledged to do more to grow its private sector and cutting-edge technologies in its government work plan for the year, as the world’s second-largest economy seeks to consolidate its strengths amid growing tensions with the United States.
Premier Li Qiang, in his annual delivery of the report at the Great Hall of the People in Beijing, told a gathering of lawmakers the government will take “solid steps to implement policies and measures designed to spur the growth of the private sector”.
The government will also “engage in regular communication with enterprises to help resolve their practical difficulties and problems”, Mr Li said.
“We in government should conduct service-oriented administration and boost the confidence of enterprises with satisfactory services,” he added.
Premier Li was speaking at the opening of the National People’s Congress (NPC) as part of the country’s annual parliamentary sessions also known as the Two Sessions or lianghui.
China has been trying to grow its private sector since its economic troubles, including crippling local government debt and a high youth unemployment rate, began piling up. This followed a crackdown on tech enterprises and the property sector from as early as 2020.
In February 2024, the authorities started drafting a law that will require equal legal treatment of private enterprises and state-owned enterprises (SOEs). If passed, it will be China’s first fundamental law dedicated to developing the private economy, and aimed at addressing the country’s long-standing practice of favouring SOEs.
An NPC spokesman said on March 4 that lawmakers are working on an early passage of the law.
Mr Li said that funding for fostering futuristic technologies such as embodied artificial intelligence, quantum technology and 6G networks will be increased in 2025, though he did not provide specifics.
It is the first time the government’s work plan has listed the terms 6G and embodied AI, which refers to humanoid robots, drones and autonomous vehicles.
Cutting-edge 6G technology, which promises speeds of up to 100 times faster than 5G speeds, reportedly supports holographic presence as well as augmented and virtual reality technologies.
China will also encourage existing foreign companies to reinvest in the country and support their collaboration with firms that can strengthen their industrial chains, Mr Li said.
Analysts told The Straits Times that Mr Li’s emphasis on the private sector and advanced technologies in 2025 are in line with China’s strategy as competition with the US intensifies.
Both countries are embroiled in a trade and technology war, with a new wave of tariff hikes announced as recently as March 4.
Dr Larry Hu, chief China economist at Macquarie Group, a financial services firm in Hong Kong, said the growing focus on its private economy and technology sectors in 2025 is “part of Beijing’s response to the (ongoing) trade war 2.0”.
Dr Zhang Zhiwei, president of Pinpoint Asset Management in Hong Kong, pointed to how the latest work report has codified signals that China’s top brass has been sending about boosting confidence in the private sector.
On Feb 20, President Xi Jinping met notable private entrepreneurs, including Alibaba co-founder Jack Ma, in a closely watched symposium that analysts said was a strong marker of China turning pro-business amid the trade war, given that a similar meeting was last held in 2018.
Dr Hu said: “Jack Ma’s appearance (at the latest meeting) is highly symbolic, as his company bore the brunt of the previous regulatory campaign.”
Mr Ma’s critique of China’s financial regulators in 2020 had allegedly kick-started the series of government crackdowns that later drove him and a number of entrepreneurs out of public sight for fear of being accused of hubris.
Chinese President Xi Jinping met notable private entrepreneurs, including Alibaba co-founder Jack Ma, on Feb 20.PHOTO: REUTERS
The private sector in China contributes some 60 per cent of its gross domestic product and 80 per cent of urban employment.
A report by the National Development Reform Commission, China’s economic planner, on March 5 stated that policymakers plan to “open up projects to private capital on an ongoing basis, including a wide range of major projects”.
These sectors – which traditionally have more state investment but will open up to more private capital – include railways, nuclear power, water conservancy, environmental protection, warehousing and logistics, new types of infrastructure and public services.
Spurring domestic consumption – a strong indicator of consumer confidence – is also back as China’s top priority in 2025 after a year, as policymakers seek to beef up other growth areas to make up for an expected decline in exports due to the ongoing trade war.
In 2024, growing China’s “new quality productive forces” was the top priority. The newfangled term, coined by President Xi, represents a call to develop the country’s high-tech sectors and for more innovation to drive industrial upgrading.
Mr Li also resolved to take steps to address “neijuan” or “rat race” problems that have caused unhealthy competition and cut-throat prices among firms, particularly those in sectors such as e-commerce, vehicles and solar energy.
Firms have complained that the race-to-the-bottom competition has caused a loss in confidence in the business environment.
A spotlight was shone on “neijuan” in July 2024, when top policymakers flagged it as an issue during a high-level meeting.
It was subsequently added to the country’s work plan for 2025 during the Central Work Economic Conference, an annual meeting that sets the national economic agenda, in December 2024.
- Aw Cheng Wei is The Straits Times’ China correspondent, based in Chongqing.
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