Entrepreneurship in China: strong or dispirited? | This Week In Asia

With the opening of a key Communist Party congress to present China’s new leadership for the next five years less than one month away, the country’s propaganda machine is in overdrive with blanket coverage on national television, print media and internet praising President Xi Jinping’s wisdom, leadership and the resulting achievements.

No fulsome adjective is spared, with superlatives such as “amazing”, “outstanding” and “historic” freely employed to extol progress in the economic, social, environmental, cultural and diplomatic spheres over the past five years. The media praises the country’s world-class bridges, tunnels, high-speed railways and satellites, as well as new trends in bike sharing and mobile payments.

The underlying message is clear: under Xi’s leadership, the government has been able to pool national resources to achieve significant breakthroughs, a key advantage of the one-party dictatorship which gets things done and does not allow others to question decisions.

Amid this campaign to eulogise the power of the government and the party, it is thus interesting to note that on Monday, the Chinese government made public its first set of guidelines to promote entrepreneurship, create a more favourable environment for entrepreneurs, and better protect their legal property and interests.

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Over the past few days, state media has lined up officials, economists and private business owners to validate the strategic importance of the guidelines, highlighting the timing of the release just before the party’s 19th congress and the fact this is the first time such a document has been released in the name of both the party and the government.

What to make of this? There is no better time for the Chinese government to advocate the entrepreneurial spirit than now, at this critical juncture when the country needs entrepreneurship and innovation to further upgrade and transform the economy to become a truly global economic power.

But rarely in recent years has entrepreneurship been more tested than now, depending on how one looks at the matter. From one angle, entrepreneurship in China has never been as strong as in the past two decades, a period that has brought dramatic changes and advances in technology and business models.

This is represented by the rise of China’s internet tycoons: Pony Ma of Tencent, Ren Zhengfei of Huawei, Lei Jun of Xiaomi, and Jack Ma of Alibaba, owner of the South China Morning Post. They have in turn inspired a new generation of young people in their 20s and 30s with soaring aspirations.

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From another angle, entrepreneurship has never appeared so dispirited and downtrodden. Various leading property and financial magnates and their companies stand accused of corruption and of colluding with corrupt officials to fleece the public coffers and engage in blatant frauds. Such cases have fanned public mistrust of the rich.

China’s private sector contributes more than 60 per cent of the nation’s gross domestic product, about 50 per cent of tax revenues, and more than 80 per cent of jobs.

But one astute commentator has pointed out that while the government, foreign direct investment and massive infrastructure spending are cited as key reasons for the spectacular rise of the Chinese economy, private sector development is often mentioned as an afterthought, something that happened as a result of China’s economic success rather than the cause of it.

In particular, since 2016, private sector investment has fallen sharply, with reports of massive capital outflow amid the crackdown on official corruption and the party’s renewed efforts to step up controls over business activities ahead of the five-yearly leadership changes scheduled for next month.

Over the past two years the top leaders, including Xi and Premier Li Keqiang, have also repeatedly stressed the importance of encouraging and supporting private sector development, with the government promising private businessmen better market access and better protection of their rights. But progress has been slow.

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For instance, the government in November released a landmark document, which was aimed at improving protection of private property rights.

Among other measures, it promised to sift through and correct a number of outstanding cases in which private businessmen’s property rights were violated. It also promised to go easy on those businessmen who were involved in illicit transactions or bribing officials in their earlier years, when the regulatory framework was weak and loopholes were plenty – the slip-ups known as “original sins”.

But nearly one year has passed and there has been little development in that regard.

Now the latest guidelines have gone one step further by promising to set up a national unified platform to help businesses protect and defend their rights, while also promising to create equal market access and streamline bureaucratic regulatory procedures.

Those guidelines may be high-sounding enough but they could prove hollow if concrete measures are not put in place and effectively enforced.

Moreover, those entrepreneurs expecting real action must wait until the current political cycle ends early next year. After the party’s leadership changes are confirmed next month, a new cabinet of senior ministerial appointments will be sworn in when the National People’s Congress opens in March.

By the time those newly minted ministers settle down and go about their work, it will probably be time for a whole new set of guidelines.

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