New arm to back private enterprises

China's central economic planning authority is establishing a new department to support private enterprises as economists emphasize the pivotal role they play in sustaining the economy.

The National Development and Reform Commission said the Private Economy Development Bureau will oversee industry monitoring, analysis, policy coordination, and formulation to foster growth.

NDRC vice chairman Cong Liang said local governments have reported over 3,500 projects with private investments totaling around 3.7 trillion yuan (HK$3.99 trillion) in response to the initiative.

Zhong Xiaoping, deputy director of the Center for China and Globalization, warned at the forum that if private enterprises falter, the economy will lose its prospects.

He also expressed deep concern over the challenges faced by Chinese companies looking to expand internationally.

Qi Xiangdong, vice chair of All-China Federation of Industry and Commerce, said private firms need to shift their focus from rapid expansion to survival owing to changes in macroeconomic conditions.

China should prioritize introducing finance policies, such as increasing individual incomes, over currency policies to support domestic demand, said Cai Hongbin, dean of HKU Business School, adding that China's economic recovery is expected to be a long-term project.

Managing director and chief China economist at JP Morgan Haibin Zhu stressed the need to shift from stimulus to support consumption.

Increasing individual income, reducing savings, especially among the middle class, and promoting consumption are key, but implementing cash consumption vouchers like in Hong Kong is challenging due to China's large population.

Meanwhile, Xu Lin, former director of NDRC, said China's economy is facing a significant structural slowdown and highlighted the need for green transactions and other innovative technologies as the key solutions to overcome the situation.

himo.liu@singtaonewscorp.com