Beijing Rushes to Shore Up Battered Private Economy. Skepticism Abounds.

livemint.com:

China’s leadership is lavishing the country’s beleaguered private sector with a sweeping show of support as a nascent economic recovery falters. But grand declarations and rhetoric alone won’t suffice, say economists and investors.

Sluggish domestic demand and a widely held view that Beijing still favors its state-owned enterprises mean that sentiment among the private business owners—a group that accounts for most of the economy’s dynamism and hiring—isn’t likely to turn around, at least not in the near term. In a high-profile pronouncement this week, China’s Communist Party and the country’s cabinet jointly unveiled a list of more than 30 guidelines vowing to make the private sector “bigger, better and stronger." Authorities said the measures would level the playing field between privately-run and state-owned enterprises, promising to break down market barriers, expand financing for privately held companies and engage them in future policy consultations.

Beijing’s outreach to the private sector—a segment that contributes about 60% of China’s total output and 80% of urban employment—comes as growth in the world’s second-largest economy is decelerating on multiple fronts. It also marks a reprieve from the previous three years, in which Chinese officials decimated industries including after-school education and property with a series of regulatory crackdowns and strict limits.

The measures, unveiled on Wednesday, drew public praise from several prominent entrepreneurs such as Tencent Holdings’ low-profile co-founder Pony Ma. The videogame and social media titan and other major internet companies have seen their business and profits pummeled by Beijing’s sudden changes in regulation in the last two years.