December 11, 2018

The New New World: Private Businesses Built Modern China. Now the Government Is Getting Involved.

“Such statements as ‘there should be no state-owned enterprises’ and ‘we should have smaller-scale state-owned enterprises’ are wrong and slanted,” Mr. Xi said during a visit to a facility owned by China National Petroleum Corporation, a major state-controlled oil company.

China’s leadership turned to entrepreneurs in the late 1970s, after the government had led the economy to the brink of collapse. Officials gave them special economic zones where they could open factories with fewer government rules and attract foreign investors. The experiment was an unparalleled success. When extended to the rest of the country, it created a growth machine that helped make China second only to the United States in terms of economic heft.

Today, the private sector contributes nearly two-thirds of the country’s growth and nine-tenths of new jobs, according to the All-China Federation of Industry and Commerce, an official business group. So pressures on private businesses could create serious ripples.

“The private sector is experiencing great difficulties right now,” wrote Mr. Hu, the retired minister, who as the son of a former top Communist Party leader is often a voice for reform in China, in an essay posted online last Thursday. “We should try our best not to replicate the nationalization of private enterprise in the 1950s and the state capitalism.”

The Chinese president, who has sought greater party control over the military, the media and civil society, is now focusing on business. The government is considering taking direct stakes in the country’s big internet companies. Regulators have stepped up existing requirements that businesses, even foreign ones, give Communist Party committees a greater role in management.

Leftist scholars, bloggers and government officials are providing theoretical and practical support. In January, Zhou Xincheng, a professor of Marxism at Renmin University in Beijing, declared that private ownership should be eliminated.

Article source: https://www.nytimes.com/2018/10/03/business/china-economy-private-enterprise.html?partner=rss&emc=rss

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