Chinese Vice Premier Liu He announced this week that Beijing would stand by private enterprises. But experts say the Chinese regime is merely trying to “appease” the people and raise public confidence amid recent regulatory crackdowns on domestic businesses.
China affairs analyst Tang Jingyuan believes that curbing private enterprises while supporting the growth of state-owned firms is “a settled policy” that will not change under Chinese leader Xi Jinping.
Tang described the role of the Chinese Communist Party as “a bad cop,” adding that the vice premier needs to “play the good cop” to ease the panic in the private sector and prevent another loss in public confidence.
According to Tang, the recent move has targeted large private enterprises, particularly tech companies with political ties that don’t support the top leadership. Yet harsh purges of business leaders would lead to resistance from small- and medium-sized private firms and discourage capital flows, he said.
Regulators then halted Ant Group’s initial public offering in Hong Kong and Shanghai in November that year. Ant Group is an affiliate company of Alibaba Group.
Appeasement
An opinion piece, which was recently published on Chinese social media WeChat and widely circulated in state media, described Beijing’s recent regulatory crackdown on various industries as a “profound change” and emphasized that whoever goes against the campaign would be cast aside.“These regulations caused a bit of panic,” Beijing-based independent journalist Gao Yu told The Epoch Times, calling the move “an overkill.”
Following the new rules for online video games, e-commerce companies, celebrity fan clubs, and ride-hailing firms, Chinese leader Xi Jinping also proposed “common prosperity” at a financial conference three weeks ago in a bid to narrow the widening wealth gap.
Xi highlighted the approach of the “three distributions” in dealing with the problem of income inequality, a notion proposed by the Chinese economist Li Yining in 1994, which refers to the market, government policies, and voluntary donations.
“Appeasement policies need to be in place,” Gao said, given the fact that private enterprises now take up a large portion of China’s tax revenue and labor resources.
Liu also mentioned on Monday that the private economy contributes over 50 percent of tax revenue, over 60 percent of GDP, and 80 percent of urban employment in China.
“If private enterprises collapse, or flee with the money, or do nothing ... [without capital flow] the very bad will come to China’s economy,” Gao said.
