Xi Jinping: Speech at the Symposium on Private Enterprises

Speech at the Symposium on Private Enterprises

(November 1, 2018)

Xi Jinping

 

 

　　

　　Hello everyone! Today, we are convening this symposium primarily to hear your views and suggestions on the economic development landscape and the growth of the private sector. First of all, on behalf of all the private-sector entrepreneurs present here, as well as the vast ranks of private-sector entrepreneurs across the country, I would like to extend my sincere greetings.

　　Just now, several representatives from private enterprises delivered remarks and put forward many valuable opinions and suggestions, which the relevant departments should carefully study and incorporate. Now, in light of your remarks and the issues you have raised, I would like to share a few points.

　　China’s non-public sector of the economy has developed since the launch of reform and opening-up, guided by the Party’s principles and policies. The basic economic system—under which public ownership plays the dominant role while diverse forms of ownership develop together—is an essential component of the socialist system with Chinese characteristics and a necessary requirement for improving the socialist market economy. Following the Third Plenary Session of the 11th CPC Central Committee, our Party broke free from the constraints of traditional notions regarding the question of ownership, thereby opening the door to the development of the non-public sector. In 1980, Zhang Huamei of Wenzhou obtained a business license as an individual industrial and commercial operator. By 1987, the number of urban workers engaged in individual businesses and other sectors nationwide had reached 5.69 million, and a large number of private enterprises were flourishing. After Comrade Deng Xiaoping’s Southern Talks in 1992, a new wave of entrepreneurship and the vigorous development of the private sector swept across the country; many well-known, large-scale private enterprises took their first steps during this period.

　　The 15th National Congress of the Communist Party of China established “public ownership as the mainstay, with diverse forms of ownership developing together” as the basic economic system of our country, and explicitly stated that “the non-public sector is an important component of China’s socialist market economy.” The 16th National Congress of the Communist Party of China proposed to “unswervingly consolidate and develop the public sector” and to “unswervingly encourage, support, and guide the development of the non-public sector.” The 18th National Congress of the Communist Party of China further emphasized: “Unswervingly encourage, support, and guide the development of the non-public sector, ensuring that all forms of ownership equally and lawfully access production factors, participate fairly in market competition, and receive equal legal protection.”

　　Since the 18th National Congress of the Communist Party of China, I have repeatedly reaffirmed our commitment to upholding the basic economic system and to the “two unwavering principles.” The Third Plenary Session of the 18th CPC Central Committee stated that both the public sector and the non-public sector are important components of the socialist market economy and vital foundations for China’s economic and social development; that property rights in the public sector are inviolable, and so too are those in the non-public sector; that the state protects the property rights and legitimate interests of all forms of ownership, upholds equality of rights, equality of opportunity, and equality of rules, abolishes all unreasonable regulations targeting the non-public sector, removes various hidden barriers, and stimulates the vitality and creativity of the non-public sector. The Fourth Plenary Session of the 18th CPC Central Committee called for “improving the property‑rights protection system with fairness as its core principle, strengthening the protection of property rights of economic entities of all forms of ownership and of natural persons, and revising laws and regulations that contravene fairness.” The Fifth Plenary Session of the 18th CPC Central Committee emphasized the need to “encourage private enterprises to enter more sectors in accordance with the law, introduce non‑state capital into the reform of state‑owned enterprises, and further unleash the vitality and creativity of the non‑public sector.” At the 19th National Congress of the CPC, the “two unwavering principles” were enshrined in the fundamental strategy for upholding and developing socialism with Chinese characteristics in the new era, thereby being formally established as a major policy of the Party and the state.

　　On March 4, 2016, while attending the joint panel meeting of members from the China National Democratic Construction Association and the All-China Federation of Industry and Commerce at the Fourth Session of the 12th National Committee of the Chinese People’s Political Consultative Conference, I delivered a speech specifically on upholding China’s basic economic system, clarifying the Party and the state’s principles and policies toward the private sector. The purpose of today’s meeting is to pool wisdom, bolster confidence, and work in concert to sustain and strengthen the positive momentum of China’s private-sector development.

　　On October 20 this year, I wrote a special reply to the private entrepreneurs honored in the “Ten Thousand Enterprises Assist Ten Thousand Villages” initiative, emphasizing that over the past 40 years of reform and opening-up, private enterprises have flourished, growing from small to large and from weak to strong. They have played a vital role in stabilizing growth, fostering innovation, creating jobs, and improving people’s livelihoods, becoming a key driving force for economic and social development. Supporting the development of private enterprises has been a consistent policy of the CPC Central Committee, and this commitment remains unwavering.

　　I. Fully affirm the important status and role of China’s private sector.

　　This year marks the 40th anniversary of China’s reform and opening-up. Over the past four decades, China’s private sector has grown from small to large and from weak to strong, steadily expanding and strengthening. By the end of 2017, the number of private enterprises in China had exceeded 27 million, individual business households surpassed 65 million, and registered capital totaled more than 165 trillion yuan. In summary, the private sector exhibits the “56789” characteristics: it contributes over 50% of tax revenue, more than 60% of GDP, over 70% of technological innovation outcomes, more than 80% of urban employment, and accounts for over 90% of the total number of enterprises. Among the Global Fortune 500 companies, the number of Chinese private firms rose from one in 2010 to 28 in 2018. Today, China’s private sector has become an indispensable driving force behind the country’s development, serving as a major arena for entrepreneurship and employment, a key player in technological innovation, and an important source of national tax revenue. It has played a vital role in advancing China’s socialist market economy, transforming government functions, facilitating the transfer of surplus rural labor, and expanding into international markets. For many years, countless private entrepreneurs, with their pioneering spirit of innovation and unwavering determination, have rallied millions of workers to strive diligently, start businesses under challenging conditions, and continuously innovate. The remarkable economic achievements that have defined China’s development would not have been possible without the invaluable contributions of the private sector.

　　Our Party’s stance on upholding the basic economic system is clear and consistent, and it has never wavered. China’s public‑sector economy has been shaped over a long period of national development and has amassed substantial wealth—wealth that belongs to all the people. We must safeguard it, use it effectively, and ensure its continued growth, so that it steadily preserves and enhances its value. Under no circumstances should vast amounts of state‑owned assets be left idle, allowed to leak away, or squandered. Our efforts to advance the reform and development of state‑owned enterprises, strengthen oversight of state‑owned assets, and combat corruption in this sector are all aimed at achieving these goals. At the same time, we emphasize that consolidating and developing the public‑sector economy is not at odds with encouraging, supporting, and guiding the development of the non‑public sector; rather, the two are organically unified. The public‑sector and non‑public sectors should complement one another and reinforce each other, instead of excluding or neutralizing one another.

　　For some time now, certain voices in society have advanced remarks that deny or cast doubt on the private sector. For example, some have put forward the so‑called “theory of the private sector’s exit,” claiming that the private sector has fulfilled its mission and should step off the historical stage; others have advanced the “new public–private partnership theory,” mischaracterizing the current mixed‑ownership reform as a new round of “public–private partnerships”; still others assert that strengthening Party building and trade union work in enterprises amounts to exerting control over private enterprises, and so on. Such claims are entirely mistaken and run counter to the Party’s major policies and principles.

　　Here, I wish to reiterate that the status and role of the non-public sector in China’s economic and social development remain unchanged. Our unwavering policy of encouraging, supporting, and guiding the development of the non-public sector has not changed. Nor has our commitment to creating a favorable environment and providing more opportunities for its growth. China’s basic economic system is enshrined in the Constitution and the Party Constitution—this is immutable and cannot be altered. Any words or actions that deny, doubt, or undermine this fundamental economic system are inconsistent with the Party and the state’s policies; such voices should neither be heeded nor believed. All private enterprises and private entrepreneurs can rest assured and focus on pursuing sound development.

　　In short, the basic economic system is one that we must uphold over the long term. The private sector is an intrinsic component of China’s economic system, and private enterprises and private entrepreneurs are our own people. The private sector is a major achievement of the development of the socialist market economy, a vital driving force behind its continued growth, and a key player in advancing supply-side structural reform, promoting high-quality development, and building a modernized economic system. It is also an important source of strength for our Party as it exercises long-term governance and unites and leads the Chinese people in realizing the Two Centenary Goals and the Chinese Dream of national rejuvenation. On the new journey toward fully building a moderately prosperous society and then a modern socialist country, China’s private sector must grow stronger, not weaker; far from “leaving the stage,” it should step onto an even broader platform.

　　II. Accurately Understanding the Difficulties and Challenges Facing the Current Development of the Private Sector

　　Recently, some private enterprises have encountered numerous difficulties and challenges in their operations and development. Some private entrepreneurs have described these as “three towering mountains”: the iceberg of market conditions, the mountain of financing constraints, and the volcano of transformation. The root causes of these difficulties are multifaceted, stemming from the convergence of multiple contradictions—between external and internal factors, and between objective and subjective reasons.

　　First, this is a result of changes in the international economic environment. For some time now, risks have been mounting in the global recovery process, and protectionism and unilateralism have risen markedly, exerting significant adverse effects on China’s economy and market expectations. Private enterprises account for 45% of China’s total exports; accordingly, many private exporters are inevitably affected, and private firms that supply supporting components to export-oriented companies or operate along the same industrial value chain will also bear the brunt.

　　Second, this is a result of China’s economy transitioning from a phase of rapid growth to one of high-quality development. At present, we are in a critical period of transforming our development model, optimizing the economic structure, and shifting growth drivers. While the pace of economic expansion will slow, the comprehensive upgrading of the consumption structure and the rapid adjustment of the demand structure are placing higher demands on the quality and level of supply, inevitably imposing pressure on enterprises to undergo transformation and upgrading. During this structural adjustment, industry concentration typically rises, with leading firms emerging as winners—this is the normal outcome of market‑driven survival of the fittest. With market volatility, economic fluctuations, structural adjustments, and institutional reforms all at play, it is inevitable that some private enterprises encounter difficulties and challenges; these reflect the long‑term adjustment pressures brought about by changes in the external environment. The requirements of high‑quality development must be gradually adapted to by both private and state‑owned enterprises alike.

　　Third, this stems from inadequate policy implementation. In recent years, we have introduced numerous policies and measures to support the development of the private sector; however, many have been poorly implemented, yielding limited results. Some departments and local authorities lack a thorough understanding of the Party and the state’s overarching principles of encouraging, supporting, and guiding the growth of private enterprises, leading to unwarranted policy deviations in practice. Significant gaps remain in areas such as equal protection of property rights, equal participation in market competition, and equal access to production factors. Moreover, some policies were formulated without sufficient preliminary research, failing to adequately solicit input from businesses and to fully assess their potential impacts, thus leaving enterprises with insufficient time to adapt. Certain policies are poorly coordinated, resulting in cumulative effects that reinforce one another, while others are implemented in a simplistic manner, causing well-intentioned measures to produce unintended adverse consequences. For example, in efforts to prevent and defuse financial risks, some financial institutions have become reluctant to extend credit to private enterprises, or have even resorted to outright loan withdrawal, thereby plunging these firms into liquidity crises and, in some cases, forcing them to shut down. Similarly, during the transition from business tax to value-added tax, insufficient attention was paid to the increased tax burden imposed on small and micro‑enterprises that rely on input‑tax credits. And in refining the administration of social security contributions, due consideration was not given to enterprises’ capacity to adapt to changes in collection mechanisms, nor to the anticipated contractionary effects such adjustments might entail. These issues must be addressed in light of actual conditions, so as to create a favorable environment for the development of the private sector.

　　At present, the difficulties confronting China’s private sector also stem from factors within the enterprises themselves. During the period of rapid economic growth, some private firms adopted a rather loose and undisciplined management style, focusing on expanding operations and scaling up while accumulating excessive debt. They also exhibited irregularities, instability, and even non‑compliance in areas such as environmental protection, social security, product quality, workplace safety, and corporate credit—issues that, against the backdrop of strengthened regulatory oversight and enforcement, inevitably place them under significant pressure.

　　It must be acknowledged that the difficulties currently faced by some private enterprises are real—and in some cases quite severe—and deserve the highest level of attention. At the same time, we should recognize that these challenges are inherent to development, part of the process of progress, and inevitable growing pains; they can and will be resolved as we continue to advance. I am confident that, so long as we uphold the basic economic system and faithfully implement the Party and the state’s policies, the private sector will surely achieve even greater growth.

　　III. Strongly support the development and growth of private enterprises.

　　Maintaining composure, bolstering confidence, and focusing on doing our own work well are key to addressing the myriad risks and challenges we face. At present, China’s economy is generally stable, with steady progress and major indicators remaining within an appropriate range. At the same time, uncertainties in China’s economic development have risen markedly, downward pressure has intensified, and businesses are encountering growing operational difficulties. These are all inevitable issues that arise as we move forward.

　　Faced with difficulties and challenges, we must recognize the favorable conditions and strengthen our confidence in the inevitable success of China’s economic development. First, China possesses tremendous resilience, vast potential, and ample policy flexibility. With a domestic market of over 1.3 billion people, China is at a stage where new‑type industrialization, informatization, urbanization, and agricultural modernization are advancing in tandem. The expanding middle‑income group is generating substantial demand for consumption upgrades, while imbalances in urban–rural and regional development offer considerable room for growth. Second, China enjoys solid development conditions and a strong material foundation: it boasts one of the world’s most complete industrial systems and steadily strengthening capabilities in scientific and technological innovation, with a total savings rate that remains at a relatively high level. Third, China is rich in human capital, with a workforce of more than 900 million, including over 170 million individuals who have received higher education or possess specialized skills; each year, more than 8 million college graduates enter the labor market, ensuring that China’s comparative advantage in labor remains pronounced. Fourth, China’s territory is vast, with abundant land resources and significant potential for intensive land use, providing robust spatial support for economic development. Fifth, taking all factors into account, the fundamentals underpinning China’s healthy and stable economic development remain unchanged; the production‑factor conditions that sustain high‑quality growth have not altered; and the overall long‑term trend of steady progress has persisted. Compared with major economies, China’s economic growth continues to rank among the highest worldwide. Sixth, China enjoys unique institutional advantages: we benefit from the strong leadership of the Communist Party, the political strength of concentrating resources to accomplish major undertakings, the ongoing deepening of reform that continuously unleashes development momentum, and steadily improving macroeconomic regulation capabilities.

　　From the perspective of the external environment, the global economy as a whole is showing signs of recovery and rebound, and peace and development remain the defining trends of our times. In the first three quarters of this year, China’s imports and exports maintained steady growth, with total trade volumes with major trading partners all registering increases. As the joint construction of the Belt and Road Initiative continues to advance in a solid and pragmatic manner, investment and trade cooperation between China and countries along the Belt and Road has accelerated, emerging as a new highlight in our external economic landscape.

　　In short, as long as we maintain strategic resolve, adhere to the overarching principle of seeking progress while ensuring stability, take supply-side structural reform as the main thread, and comprehensively deepen reform and opening-up, China’s economy will surely accelerate its transition to a path of high-quality development and usher in an even brighter future.

　　In the course of China’s economic development, we must continuously foster a more favorable environment for the private sector, help it overcome the challenges it faces, and support its reform and growth—transforming pressures into driving forces, ensuring that the private sector’s innovative potential is fully unleashed and its creative vitality is fully unleashed. To this end, we must ensure the effective implementation of policy measures in six key areas.

　　First, we must reduce the tax and fee burden on enterprises. We need to implement all measures under the supply-side structural reform initiative to cut costs, thereby substantially easing the financial strain on businesses. We should significantly increase tax reductions, advancing substantive cuts to value-added tax and other taxes that are simple, straightforward, and easy to administer, so as to enhance enterprises’ sense of gain. Universal tax exemptions should be extended to small and micro‑enterprises and technology‑based start-ups. Based on actual conditions, we will lower the nominal rates of social security contributions, stabilize contribution methods, and ensure a meaningful reduction in the effective social security burden borne by enterprises. While adopting stricter standards to prevent tax evasion, we must also avoid shutting down normally operating businesses due to improper taxation. Furthermore, we will continue to streamline and simplify administrative approval procedures and enterprise‑related fees pertaining to private investment, regulate intermediary practices and the conduct of intermediary organizations, and lighten the burden on businesses. We will accelerate the move toward zero fees for administrative and public service charges levied on enterprises, thereby lowering overall business costs. Successful practices from certain localities should be promptly scaled up nationwide.

　　Second, we must address the difficulties and high costs of financing faced by private enterprises. Priority should be given to resolving the challenges—particularly for small and medium-sized enterprises—in accessing credit, while gradually reducing financing costs. We need to reform and improve the regulatory oversight and internal incentive mechanisms of financial institutions, linking banks’ performance assessments to their support for the development of the private sector, thereby tackling the issues of reluctance and unwillingness to extend credit. We will expand market access in the financial sector, broaden financing channels for private enterprises, and leverage the roles of private banks, micro‑finance companies, venture capital, equity markets, and bond issuance. For private firms facing margin‑call risks on pledged equity, relevant authorities and local governments should promptly study and implement special measures to help these enterprises navigate their difficulties and prevent disruptions such as changes in ownership. Local governments should provide guidance and, where appropriate, offer necessary financial assistance to promising private enterprises that align with the goals of optimizing and upgrading the economic structure. Provincial governments and cities under separate planning may raise funds independently to establish policy‑oriented rescue funds, employing a combination of tools—while strictly preventing illegal borrowing and safeguarding state assets—to assist key private enterprises within their jurisdictions, including industry leaders, major employers, and firms in strategic emerging sectors. We must attach great importance to the issue of triangular debt and rectify practices by certain government departments and large enterprises that exploit their dominant positions to impose unfair terms and delay payments to private firms.

　　Third, we must foster a fair competitive environment. We need to dismantle the myriad “rolling shutter doors,” “glass doors,” and “revolving doors” that erect barriers to entry, ensuring that private enterprises enjoy equal treatment in market access, approval and licensing, business operations, tendering and procurement, and military‑civilian integration, thereby creating ample market space for their development. We should encourage private firms to participate in the reform of state‑owned enterprises. Moreover, we must shift industrial policies from being differentiated and selective to being inclusive and functionally oriented, eliminate policy measures that contravene principles of fairness, openness, and transparency, and strengthen enforcement of antitrust and anti‑unfair competition laws.

　　Fourth, we must refine the ways in which policies are implemented. Regardless of how well‑intentioned a policy may be, it is essential to anticipate potential adverse effects, assess the gap between actual implementation and the policy’s original objectives, and evaluate whether it might produce cumulative or unintended consequences with other measures—continuously elevating the quality of policymaking. All regions and departments should proceed from reality, enhance their governance and management capabilities, strengthen policy coordination, refine and quantify policy measures, and develop complementary supporting actions, so as to ensure that policies are effectively put into practice, meticulously implemented, and fully enforced, thereby enabling private enterprises to derive tangible benefits from them. In pursuing capacity reduction and deleveraging, the same standards must be applied across all types of ownership; policies must not be implemented through a biased lens, nor should credit be arbitrarily cut off or withdrawn from private enterprises without due consideration. Government agencies must raise the level of their performance, aligning with the country’s macro‑regulatory framework, and avoid simplistic approaches in micro‑level enforcement—particularly in areas such as work safety and environmental protection—by adhering to the principle of seeking truth from facts and basing decisions on concrete realities. Policy implementation must eschew one‑size‑fits‑all measures. In conjunction with reform oversight, special inspections should be conducted on reform initiatives favorable to private enterprises—such as those on property rights protection, fostering an entrepreneurial spirit, and conducting market‑fair‑competition reviews—that have been deliberated and approved at meetings of the Central Commission for Comprehensively Deepening Reform, so as to ensure their effective implementation.

　　Fifth, we must foster a new type of government–business relationship characterized by both closeness and integrity. Party committees and governments at all levels should ensure that the requirements for building such a relationship are fully implemented, treating support for the development of private enterprises as a key task. They must devote more time and effort to addressing the needs of private firms and nurturing the growth of private entrepreneurs—this should not remain merely a slogan. While we require leading cadres to maintain clear boundaries and exercise appropriate discretion in their interactions with private entrepreneurs, this does not mean they may turn a blind eye to legitimate demands or fail to protect the lawful rights and interests of these entrepreneurs; rather, they should proactively provide services to private enterprises. The principal officials of relevant departments and local authorities should regularly solicit feedback and address the concerns of private enterprises, particularly when they face difficulties or challenges, taking decisive action and offering front‑line support to help resolve practical problems. The performance of those who support and guide state-owned enterprises, private enterprises, and especially small and medium-sized enterprises in overcoming obstacles and pursuing innovative development shall be incorporated into the cadre assessment and evaluation system. People’s organizations, federations of industry and commerce, and other relevant bodies should conduct in-depth field visits to private enterprises, actively report on the difficulties and issues they encounter in production and operations, and support their reform and innovation. We must strengthen public opinion guidance, accurately communicate the Party and the state’s major policies and principles, and promptly clarify any erroneous claims.

　　Sixth, we must safeguard the personal safety and property of entrepreneurs. To stabilize expectations and foster an entrepreneurial spirit, security is the fundamental prerequisite. We are intensifying our fight against corruption in line with the Party’s requirements for self‑governance and comprehensive strict Party governance, aiming to punish corrupt elements within the Party, cultivate a sound political environment, and resolutely oppose and rectify violations of discipline and law—such as seeking personal gain through abuse of power, trading money for influence, engaging in embezzlement and bribery, extorting or demanding favors, and oppressing the people. These measures help create a healthy climate for the development of the private sector. In carrying out their duties, disciplinary inspection and supervision authorities sometimes need the assistance of business leaders in investigations. In such cases, it is essential both to get to the bottom of the issues and to protect their legitimate personal and property rights, ensuring that enterprises can operate lawfully. As for certain irregular practices that some private enterprises may have engaged in in the past, we should view them through the lens of development and handle them in accordance with the principles of legality and presumption of innocence, so that entrepreneurs can shed their burdens and move forward with confidence. I have repeatedly stressed the need to identify and correct a number of wrongful and unjust cases involving infringements on corporate property rights. More recently, the people’s courts have retried several landmark cases in accordance with the law, receiving positive public response.

　　I have stated that for the non-public sector to achieve sound development, it is essential that its entrepreneurs and business leaders grow in a healthy manner. I hope that the broad ranks of private-sector entrepreneurs will strengthen self‑learning, self‑education, and self‑improvement. Private entrepreneurs should cherish their public image, love the motherland, the people, and the Communist Party of China, uphold the core socialist values, and carry forward the entrepreneurial spirit, setting an example of patriotism, dedication, lawfulness, innovation, and social responsibility. They must act with integrity and follow the right path—focusing wholeheartedly on running their businesses and conducting operations in strict compliance with laws and regulations, thereby enhancing their competitive edge within a lawful and compliant framework. Lawful operation is a principle that all enterprises must observe; it is also the key to sustainable, long‑term development. Enterprises must fortify their internal capabilities, particularly by improving operational efficiency and management standards, refining corporate governance structures, and encouraging eligible private firms to establish modern corporate systems. The new generation of private entrepreneurs should inherit and carry forward the spirit of their predecessors—characterized by hard work, boldness and pragmatism, a focus on real industry, and excellence in core businesses—striving to make their enterprises stronger and better. Moreover, private enterprises should broaden their international outlook, bolster their capacity for innovation and core competitiveness, and cultivate more companies that can compete globally.

　　That’s all I have to say. Thank you, everyone.