China Reveals Plan to Boost Private Investment

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Facts

  • The Chinese government has announced an intent to attract more private capital for major infrastructure projects. The National Development and Reform Commission said on Monday that it will encourage investors in the transportation, water, energy, and agricultural sectors.1
  • The Commission released a list on Monday of 2.9K local government projects worth 3.2T yuan ($591B) that private investors can participate in. This step is intended to improve business sentiment and boost faltering economic growth.2
  • This announcement came after China last week pledged to improve the private sector, as Beijing is planning on its post-pandemic economic recovery guidelines to make the economy "bigger, better and stronger."3
  • In last week's pledge, the Chinese government and the Communist Party vowed to treat private companies just as they would state-owned enterprises. The agreement also included a promise to ensure equal treatment in terms of intellectual property, landholding, and labor.4
  • According to Commission Director Luo Guosan, the new measures include establishing a national key private investment project database, recommending those in the database to relevant financial institutions, and encouraging them to provide financing.5
  • The Commission already conducted three meetings on July 3, 10, and 17 with private companies across multiple sectors.6

Sources: 1Al Jazeera, 2The Straits Times, 3Reuters, 4CNBC, 5CGTN, and 6China Daily.

Narratives

  • Pro-China narrative, as provided by Global Times. Beijing has recognized the importance of private businesses in order for China to boost its economic recovery after two years of slow growth and COVID lockdowns. Private enterprises generate half of all tax revenue and over 60% of GDP. This is a strong message from the Commission.
  • Anti-China narrative, as provided by Yahoo Finance. The world's second-largest economy has suffered from a confidence problem after two years of crackdowns and pandemic controls. Foreign investors want the same level of access that Chinese companies enjoy in Western markets. Private entrepreneurs in China are waiting for the government to provide more than just rhetoric regarding market access. For now, the PRC's private sector push is running into skepticism.

Predictions