Beijing’s Planners Find Strange (and Likely Ineffective) Ways to Get Buy-In From Private Investors

Beijing’s planning commission thinks the best way to motivate private investors is to insert itself into the process—very communist and not likely to succeed.

People dine at a restaurant at a shopping mall in Beijing, on May 26, 2023. Jade Gao / AFP via Getty Images

China’s beleaguered economy could use a dose of private investment—for expansion and for hiring—however, private business remains reluctant. Beijing’s planners at the National Development and Reform Commission (NDRC) have put forward a 17-point scheme to turn the situation around. It relies so heavily on government direction that it is hard to see how much it will inspire private Chinese businesses and, consequently, how successful the effort will be. It’s even hard to see whether the NDRC will push activity in economically appropriate directions.

Beijing knows how crucial private business is to China’s economy. Small and medium-sized firms—those that Beijing designates as having “56789” characteristics—account for more than 90 percent of the businesses operating in China today. They produce 60 percent of the economy’s total goods and services and 70 percent of its innovative capacity. They employ 80 percent of those working in urban areas and create 90 percent of new jobs. They also contribute half of all government revenues.