Shot in the arm for China's private sector

New policy steps fill economists, experts with fresh growth hopes amid challenges

China has pledged efforts to bolster the private sector with a series of policy measures to support its healthy and sustained development, as part of the country's wider efforts to revive the economic recovery amid concerns over the gloomy outlook.

Experts hailed the country's latest moves, including the top-level guidance and two documents on stimulating the vitality of the private sector, saying they will significantly boost market confidence and help shape expectations.

But, the experts also warned that private firms still face pressures and challenges like rising costs and financing difficulties, and urged stepped-up efforts to fully implement the existing policies as well as more actions to create a favorable business environment.

"The healthy development of the private sector, especially the small and medium-sized enterprises, is playing a key role in keeping the economy dynamic and boosting innovation and entrepreneurship, which will help stabilize the growth and inject strong impetus into the economy," said Tian Xuan, associate dean of Tsinghua University's PBC School of Finance.

Tian said the country has already rolled out a series of supportive measures in recent years, like reducing fees and taxes, lowering financing costs and supporting SMEs' access to funding, in a move to buffer the "scarring effect" of the COVID-19 pandemic.

He, however, said the foundation for the economic recovery is not yet solid, and the market expectations and confidence are still rather weak with souring private investment.

According to the National Bureau of Statistics, fixed-asset investment by the private sector edged down 0.2 percent year-on-year in the first half of this year versus a 0.1 percent decline in the first five months of the year.

To reinvigorate the private sector and further consolidate the economic recovery trend, China has recently issued a top-level guidance as well as two detailed documents for bolstering the private sector and supporting more private investment.