With mid-July data showing China’s second-quarter GDP grew slower than expected, policymakers now face the daunting task of consolidating the economic recovery trend and stabilizing employment.
Amid concerns over the challenges ahead, China has announced a series of measures to bolster the private sector, the biggest source of jobs and key to reviving the economic recovery.
Businesspeople said the government’s new moves have significantly boosted their confidence and expectations, voicing strong optimism over both future development and growth of the broader economy.
Citing key moves mapped out by the recently released documents, Lei Jun, founder, chairman and CEO of Chinese smartphone vendor Xiaomi Corp, said the new moves will help optimize the development environment, promote the high-quality development of the private sector as well as guide public opinion to create a supportive environment for the private sector.
“As of today, the number of private firms has exceeded 50 million, accounting for over 90 percent of the number of overall businesses,” Lei said. “The private sector is playing an increasingly important role in promoting development, boosting innovation, generating more jobs, improving people’s livelihood and expanding opening-up.”
He said measures like supporting the technological innovation of the private sector and accelerating the digital and technological transformation have boosted Xiaomi’s confidence and expectations, and the company will continue to develop its main business to do a better job of contributing to the real economy.
Gao Jifan, chairman of Trina Solar Co, a leading Chinese photovoltaics company, said a raft of policy measures to bolster the private sector showcased the country’s firm determination to promote the sustained development of the private sector, which offers new growth opportunities for private firms and helps boost the confidence of Trina Solar for its future development.
According to Gao, the private sector has made great contributions to China’s economic ascent during the past decades, and it also plays a key role in speeding up economic transformation and upgrading, promoting sustained growth and stabilizing the overall economy.
In fact, the private sector is still grappling with weakening external demand, falling profits and mounting downward pressures, highlighting the need for more steps to revive the economic momentum.
Data from media group Caixin showed China’s July factory activity shrank, pointing to mounting pressures facing the Chinese economy and raising the urgency for more steps to shore up the world’s second-largest economy.
Caixin China General Manufacturing Purchasing Managers’ Index — it gauges operating conditions in the sector — came in at 49.2 from 50.5 in June, below the 50-point mark that separates growth from contraction.
Caixin said both manufacturing supply and demand contracted in July, and the gauges for total new orders and output were the lowest since December and January, respectively.
Notably, new export orders fell sharply in July amid concerns over the mounting overseas recession risks and insufficient external demand. And the subindex for new export orders plumbed the lowest level since September.
Wang Zhe, a senior economist at Caixin Insight Group, said while manufacturers remain optimistic as the July reading for their expectations for future output stayed above 50, some surveyed companies have expressed concerns about the economic prospects at home and abroad.
Reading key signals from a recent meeting of the Political Bureau of the Communist Party of China Central Committee, Wang said the current economy faces new difficulties and challenges, and the external environment is complex and severe; so, in such a situation, guaranteeing employment, stabilizing expectations and increasing household income will be the top priorities.
“At present, monetary policy only has limited effect on boosting supply. An expansionary fiscal policy that targets demand should be prioritized,” he said.