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Can China Engineer a Turnaround of Its Weakening Private Economy?
August 03, 2023 | Report
Trusted Insights for What’s Ahead®
- China’s top leadership has become increasingly concerned about the state of the Chinese economy, and the slow pace of its recovery. Over recent weeks they have initiated a campaign to prop up market confidence levels, revive business activity, and boost private consumption. This includes a guideline released jointly by the Central Committee of the Communist Party of China (CPC) and the Chinese Government’s State Council outlining 31 measures to promote the development of the private economy.
- The guideline sets a framework around four main pillars to build an enabling environment for the development of the private economy, while at the same time emphasizing the leading role that the CPC has in defining its direction, as well as the importance of maintaining a favorable public opinion environment towards privately-owned enterprises (POEs).
- However, engineering a turnaround requires addressing a series of structural imbalances on the demand-side of the economy that were generated under China’s old development model, and this will take time. Going forward, authorities will have to take a more decisive stance in addressing these imbalances to allow for a sustainable increase in confidence levels, while at the same time providing support for short-term growth through stimulus measures.
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