China's private economy ushers in greater opportunities for growth

According to the 2025 Chinese government work report delivered last Wednesday, China will encourage private investment by implementing new mechanisms for public-private partnerships in a well-regulated manner and guiding more private investment toward major infrastructure and public wellbeing projects, thus creating more opportunities for the development of private capital.

This emphasis on expanding opportunities for the private economy underscores the vast potential and crucial role of China's private enterprises in future development.

Two key highlights of China's private economy

In the 1980s, China's private economy started from scratch, experiencing rapid growth throughout the 1990s and early 2000s.

Since 2018, when the central government convened a symposium specifically addressing private enterprises, their role in the national economy has become even increasingly significant, paritcularly in two main areas.

Firstly, private enterprises have significant contributed to foreign trade.

According to the General Administration of Customs of China, private enterprises have maintained China's top foreign trade entities for six consecutive years. In 2024, their share of total foreign trade rose to 55.5 percent, achieving “three key firsts”: the number of private enterprises engaged in import-export records exceeded 600,000 for the first time; private enterprises became China's largest import-export entities for high-tech products for the first time; and the share of private enterprises in China's consumer goods imports exceeded 50 percent for the first time.

Secondly, private enterprises have been key drivers of technological innovation.

In the current era of information technology, an increasing number of cutting-edge innovations are emerging from private enterprises.

Companies like Huawei in 5G technology and BYD and CATL in new energy vehicles, showcase the research strength and value-creation capabilities of China’s private sector.

Data from China’s State Administration for Market Regulation indicates that as of January 2025, the number of private enterprises classified as national high-tech firms had surged from 28,000 in 2012 to over 420,000, with their share rising from 62.4 percent to over 92 percent.

This illustrates a rapid transition from traditional labor-intensive industries to technology-driven growth within the private sector.

More measures should be taken to improve private economy

Despite significant contributions, challenges remain for private etnerprises, including financing difficulites, fair competition, and legal protections.

Since 2023, several key measures have been introduced to enhance the institutional environment for private enterprises. These include a 31-measure guideline unveiled by the State Council to on boost the private sector, the establishment of the private economy development bureau under the National Development and Reform Commission, and the enactment of the private economy promotion law.

To further expand opportunities for private capital, it is essential to deepen reform and opening up, and to implement fair competition regulations to opitimize the business environment for private enterprises.

The government work report stresses stimulating the vitality of all market entities, particularly private enterprises, recommending specific measures including:

Firstly, removing obstacles that restrict private enterprises' access to production factors and their fair participation in market competition, opening competitive infrastructure sectors to private firms.

Secondly, supporting private businesses' financial health by addressing overdue payments owed to them and encouraging private enterprises to issue bonds in public markets to increase funding.

Finally, enhancing law enforcement efforts to tackle illegal fees, fines, inspections and confiscations, thereby protecting the legal rights of private entrepreneurs.

These measures will help create a more supportive environment, enabling private enterprises to thrive and make greater contributions to China's ongoing economic development.