Premier Li's promise of support can ease the worries of private sector

In his keynote speech at the World Economic Forum in Tianjin on Wednesday, Premier Li Keqiang vowed to improve the policies for the private economy, and take more measures to support it by removing all irrational hindrances to its development and making greater efforts to open the promised sectors to private companies. Beijing News comments:

Li drew three rounds of applause for promising to support the private economy. The audience took Li's speech as the government's latest pro-private-economy pledge, which has eased many people's worries that the government may no longer actively help private companies to overcome the difficulties they are facing.

Some private companies have collapsed because of the high production costs (mainly caused by taxes, fees and labor costs), difficulty in obtaining financing, and the changing external environment. These uncertainties and challenges have foiled the efforts of many private enterprises, particularly those in the middle and lower rungs of the value chain, to upgrade their structure.

Private businesses have injected vitality into the economy since the launch of reform and opening-up 40 years ago. And private companies account for more than 70 percent of the innovations, over half of the tax revenue and more than 80 percent jobs. By the end of last year, China had about 94 million private businesses, accounting for 94.8 percent of the total number of market players. It is therefore fair to say China would not have achieved its remarkable economic success without private companies.

The deepening of reform, which has eliminated some vested interests that helped certain private enterprises to flourish, and policy adjustments at home and the changing situation overseas have added to the uncertainties of the private sector.

So Li's timely promise that the government would create a better business environment for the private sector can help ease the entrepreneurs' anxiety and boost their confidence. Now, it is up to the local governments to translate the central authorities' promise into action.