Improving Fairness in Factor Acquisition to Boost Entrepreneur Confidence

Against a backdrop of unstable expectations among private entrepreneurs and a continued slowdown in private investment growth, the central government has issued another major document promoting the development of the private economy. It reaffirms adherence to the direction of socialist market economic reform and the "two unswervinglys," while calling to "guide the entire society to objectively, correctly, and comprehensively recognize the private economy and private business figures." Fu Xiaoyong, Deputy Secretary-General of the Yabuli China Entrepreneurs Forum and co-founder of the Human Economics Institute, points out that the core of this central document is to boost entrepreneur confidence. It prescribes targeted measures for specific issues, and he looks forward to the subsequent implementation and effectiveness of these policies.

Fu Xiaoyong believes that the current primary difficulties for private enterprises include rapidly rising factor costs, policy pressures such as deleveraging and environmental protection, discrimination in market access and financing, as well as imperfect internal governance mechanisms and increased risks in international markets.

"The economy is a net, and enterprises are nodes on that net. The stretching and expansion of the economic net depend on production, sales, investment, innovation, and entrepreneur expectations. The sum of every entrepreneur's confidence is the prosperity index of an economy." To boost entrepreneur confidence, Fu Xiaoyong argues that the first step is to further improve the fairness of market access and factor acquisition. This includes strengthening the construction of systems related to and supporting market access, institutionalizing the fair competition review system, prohibiting local practices of discrimination, creating barriers, or excluding private enterprises based on ownership, and accelerating the market-oriented allocation of resources such as land, energy, and emissions indicators, allowing factors to flow to competitive private enterprises.

Additionally, "Policies should be transparent, stable, and predictable. Before introducing policies, it is recommended to fully listen to the opinions of various market entities, especially various types of business group organizations, and to set necessary lead times, transition periods, or buffer periods to reduce uncertainty in policy introduction and implementation, and to reduce administrative intervention." Fu Xiaoyong notes that the newly released central document addresses these points, and their specific future implementation is worth looking forward to.

Fu Xiaoyong also specifically mentioned that the most important factor affecting entrepreneur confidence in recent years is the external market. Strengthening communication, cooperation, and easing relations with external markets, especially those of developed countries, is a top priority. "The Chinese entrepreneur group hopes to continue reform to create and provide broader space for the continuous unleashing of entrepreneurial talent, especially by providing political guarantees for boosting entrepreneur confidence in terms of ideology. They also hope to continue opening up, especially in terms of mindset, possessing the wisdom to 'absorb all rivers' (inclusiveness), and showing the outside world more peace, understanding, and empathy."

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◆ This article is based on an interview with Frank (Fu Xiao Yong) by Wen Wei Po, in which he provides commentary on China's policies to promote the development of the private economy. It was originally published in the Hong Kong Wen Wei Po on July 21, 2023. Interviewer: Hai Yan.