In a bid to tackle the country’s economic challenges, top leader Xi Jinping recently met with China’s private sector giants. He attempted to downplay the issues, stressing that “some difficulties and challenges facing the current private economic development generally appear in the process of reform and development and industrial transformation and upgrading.” According to Xi, these problems are “partial rather than comprehensive, temporary rather than long term, and can be overcome rather than being insurmountable.”
China, the world’s second-largest economy in nominal terms and the largest economy in purchasing power parity (PPP), is currently grappling with a series of challenges. These struggles result from policy changes initiated in late 2019 to restructure the economy. Despite its rise to global prominence, China’s economic growth rate peaked in 2007; recent years have seen a noticeable decline in its economic performance. In 2024, China’s economic growth projections were modest, with the International Monetary Fund (IMF) forecasting a growth rate of just 3.3 percent by 2029.
One of the most concerning indicators of China’s economic health is the decline in private investment. According to reports, China’s private investment decreased by 0.1 percent year-on-year in 2024. This reduction is notable as it reflects a drop in the proportion of private investment in total fixed asset investment, which fell from 56.42 percent in 2019 to 50.08 percent at the end of 2024. This marks a significant shift in China’s economic structure dynamics, where private enterprises have long been crucial drivers of economic growth.
Xi and the Entrepreneurs
The private sector contributes 60 percent of China’s GDP, 70 percent of innovation, 80 percent of urban employment, and 90 percent of new jobs. It also accounts for 70 percent of investment and 90 percent of exports. However, due to the policy shift during the late 2010s, the Chinese private sector, especially the property sector, is facing severe challenges. The tech sector has also faced regulatory challenges since Xi took the initiative to overhaul the industry.
Amid these challenges, Xi has taken proactive steps to engage the corporate sector. On February 17, he attended a high-level symposium bringing together some of China’s most prominent business leaders. This meeting aimed to formulate strategies to address the economic stagnation China has experienced in recent years.
The gathering was attended by senior figures such as Premier Li Qiang, Wang Hunning, head of the Chinese People’s Political Consultative Conference (CPPCC), and Vice Premier Ding Xuexiang. Key corporate leaders like Lei Jun (founder of Xiaomi), Pony Ma Huateng (founder of Tencent), Jack Ma (founder of Alibaba Group), and Ren Zhengfei (founder of Huawei Technologies) were also present. In another sign of its importance, the meeting was also highlighted by China’s state media. CCTV broadcast a 40-second video showing the proceedings.
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Similarly, before the Third Plenary Session of the 20th Party Congress in May 2024, Xi had convened another symposium with entrepreneurs and economists in Shandong Province. The involvement of these business leaders underscores the importance of public-private partnerships in tackling the economic issues China faces. As China’s private sector has long been considered a key engine of growth, government collaboration with influential corporate figures could be crucial in helping the country weather its economic difficulties.
