Chinese billionaires support plan to restore economy – 07/20/2023 – Market

China’s billionaires have come out of the shadows to praise the Communist Party’s efforts to restore private sector confidence as Beijing tries to recharge a faltering economic recovery after the pandemic.

Industry titans, typically low-key in the country – many of whom have been hit by regulatory crackdowns in recent years – published a series of editorials and statements on Wednesday (19) and this Thursday (20) declaring their support for the party’s new action plan to strengthen private companies.

The tycoons’ seemingly orchestrated expression of confidence comes as the world’s second-largest economy grapples with slumping consumer confidence and private sector business.

In a lengthy editorial in state media, Tencent founder Pony Ma said he is “extremely excited and deeply inspired” by President Xi Jinping’s support of private groups.

The 31-point action plan, released by the party and government on Wednesday, promises to improve the business environment and treat private companies the same as their state counterparts. Measures include facilitating business initiatives to raise capital and support their overseas expansion.

Lei Jun, chief executive of phone maker Xiaomi, called it a “clear policy signal” for companies to move forward with “high-quality development and contribute to the modernization of science and technology”.

Soft drink tycoon Zong Qinghou said his Wahaha group “will follow the path of serving the country” and “will not let down the party or the state,” in a statement published by an industry group in Zhejiang province. The words appeared under a photo of Zong wearing the party’s red pin.

The Zhejiang group’s social media post contained praise from 13 other local businesspeople, including Li Shufu, chairman of automaker Geely, and Lai Meisong, founder of shipping company ZTO Express.

China’s economy grew by less than 1% in the second quarter compared with the previous three months (6.3% year-on-year), raising concerns that a deep malaise in the real estate sector is hurting business confidence.

Private sector investment contracted year-on-year in the second quarter. The private sector accounts for 60% of gross domestic product and 80% of urban unemployment in China, making it a crucial engine of growth.

Beijing has recovered from its two-year tech crackdown and is seeking to encourage companies to invest and expand amid a gloomy economic outlook.

As part of its efforts to restore confidence, the government closed investigations into Tencent’s fintech arm and Jack Ma’s Ant group. Together, they were hit with a total of 10 billion yuan ($1.7 billion) in fines.

Officials including Premier Li Qiang also met with top technology executives and praised their groups’ efforts to bolster the country’s semiconductor industry.

Noting the party’s pledges of fair competition and equal protection under the law, Tencent’s Ma said the new measures “have reinforced everyone’s confidence to build better and stronger companies”.

Frederic Neumann, HSBC’s chief economist for Asia, said the 31 points lacked detail but represented an effort by the central government to send a strong signal to lower-level officials about the importance of stimulating private sector activity.

He said markets were waiting for a meeting of China’s governing Politburo this month, where they are expected to discuss stimulus measures. Analysts see them as necessary to kick-start the sputtering economy. “There is a wait-and-see attitude among investors who want to see what concrete policy action will be taken,” Neumann said.

While the document was full of praise, support and reforms to strengthen the private sector, it also made clear that the party will remain closely involved in business. It included calls to “improve the mechanism for shaping the ideological thinking of business people” and “profoundly carry out education on core socialist ideals, beliefs and values”.

Regarding helping the country, Ma said Tencent will adopt Xi’s common prosperity program “as our strategic guide” and pledged to “deeply support national basic research” and a range of charitable efforts.

“As a private technology group, we have an important responsibility to promote technological innovation and drive development,” he said.

William Langley and Cheng Leng collaborated in Hong Kong and Nian Liu in Beijing. Translated by Luiz Roberto M. Gonçalves