The annual legislative gathering of China’s ruling communist party concluded on March 11 without passing the private economy promotion law despite much hype in official propaganda.
Experts say this shows Beijing doesn’t know what to do with its private sector; it knows that private businesses contribute significantly to the economy by generating jobs, tax revenue, and innovation, but communist ideology fundamentally conflicts with private ownership.
Hence, one of the themes of the party’s annual meetings this year was stimulating consumption. On that, the private sector plays a vital role.
According to the latest available official data, in 2023, private enterprises accounted for about half of the exports, more than half of the government tax revenue, more than 60 percent of the gross domestic product (GDP), more than 70 percent of innovation, more than 80 percent of urban jobs, and more than 90 percent of total number of companies.
When opening the conference on March 5, Chinese premier Li Qiang underscored the importance of creating a fair and competitive market environment for both state-owned and private enterprises to thrive.
The draft of Private Economy Promotion Law was highlighted in Li’s work report. However, this landmark legislation—the first foundational law specifically focused on private economy development—did not pass during the Two Sessions, contrary to external expectations.
Since the drafting process began in February last year, multiple state-run media outlets have heavily promoted the bill as a political signal of the CCP’s support for the private economy. They describe it as providing private enterprises with a “reassurance pill,” ensuring legal protection for their rights.
Days ago, many Chinese state propaganda outlets carried an article headlined, “Xi Jinping: I have always supported private enterprises.”
The tone was in stark contrast to even 2022, when the same newspapers reported Xi’s directives: capital should not be allowed to “act recklessly” and the party would “eliminate private ownership.”
Such was the narrative in the Chinese state media during the regime’s three-year regulatory clampdown on private industry between late 2020 and July 2023.
The defining moment was when authorities called off the initial public offering of Jack Ma’s Ant Group in November 2020. Privately owned businesses in financial technology, e-commerce, tutoring, and real estate industries were subject to scrutiny and had less access to money than state-owned enterprises. The CCP also demanded “golden shares” with special voting rights, board seats, and party committees in private business for tighter control.
The regime’s actions sank entrepreneurs’ confidence and were widely interpreted as reflecting the policy direction of “State advance, the private sector retreats.”
Political commentator Tang Jingyuan said the CCP doesn’t know what to do with China’s private industry. He added that its has seemingly revived passion for the sector as a “temporary compromise,” after multiple stimuli failed to turn the economy around.
“Xi has to acknowledge the status of entrepreneurs and relax his control over their businesses a bit because of the economic slump,” Tang told The Epoch Times. “However, the driver for China’s economic problem is the communist ideology and system. It’s fundamentally against private ownership and free markets.”
In Tang’s view, Xi will still prioritize state-owned enterprise because he needs national champion companies to fulfill his ambitious industrial policy to dominate the global market and move toward a CCP-led world order.
U.S.-based economist Davy J. Wong told The Epoch Times that China is stuck with a self-defeating solution: suppressing private businesses by giving state-owned enterprises more privilege and supporting privately-owned enterprises at the same time.
Products of Private Sector Gain Star Status
These annual meetings are key events for the CCP to set economic policies and message them to the Chinese public. They are also known as the “two sessions,” because members of two political bodies met concurrently at two conferences within a week—one is China’s rubber-stamp parliament, and the other is an advisory body composed of businessmen and celebrities.This year, to promote what the propaganda press called a “vibrant private economy,” several products from private business were featured as heroes.
Among them was DeepSeek, a Chinese artificial intelligence (AI) chatbot that made news in the world in January by demonstrating a cheaper AI alternative to U.S. products, and “Ne Zha 2,” a movie that has achieved more than $2 billion box office and ranks the 6th highest grossing IMAX film as of March 9.
The regime has used both to fuel nationalist sentiment. Both products bear the CCP’s influence. DeepSeek self-censors in order to be politically correct with the CCP’s party line. The movie embodies CCP-style aggressions, like those featured in its signature wolf-warrior diplomacy, according to Frank Xie, a professor of business and marketing at the University of South Carolina–Aiken.
Ne Zha is a household mythological figure in Chinese folklore. He’s known for his magical powers and courage to challenge authority. However, Xie said the film, with its over-dramatization of hatred, lawlessness, and violence, promotes communist aggression and anarchy.
The primary producer, Chengdu Kekedou Animation Film and Television, has long benefited from state support. Chinese media reported that, as early as 2009, China’s Ministry of Culture listed the company as a supported enterprise, and by 2012, it was included in the National Animation Brand Building and Protection Program, receiving continued backing from the Sichuan Provincial Government.
While DeepSeek doesn’t appear to have had state-backed funding, Beijing is pushing local governments to adopt the AI model.
In Shenzhen, a city bordering Hong Kong, more than 70 AI robots already handle hundreds of government services such as tax filings and license renewals. Hospitals in Sichuan and Guangdong provinces have rolled out AI-assisted medical consultations.
Given the strategic value of certain private enterprises, Beijing’s pledge to support the private sector is inherently “selective,” aligning with its core interests rather than benefiting a broader group of small- and medium-sized companies, said Sun Kuo-Hsiang, associate professor of international affairs and business at Nanhua University in Taiwan.
In his view, the CCP uses these private enterprises to achieve several strategic objectives such as technological advancement, ideological export, and enhancing its discourse power in the global stage. The regime’s leadership describes “discourse power” as the power to speak and to be heard.
In the long run, Sun warns that the independence of these private companies will likely decline as the CCP increasingly tightens its control to ensure they serve its interests.
“Many could transition into a ‘semi-state-owned’ model as state capital increasingly influences their decision-making on operational directions, “ he told The Epoch Times.
