Recently, the Chinese Communist Party’s United Front Work Department issued a call to action for private enterprises in China, urging them to seize “opportunities” and “strengthen their businesses.” The United Front Work Department, in collaboration with the All-China Federation of Industry and Commerce, will launch a campaign of “publicity and education” aimed at guiding private enterprises to “aid” in economic development. Scholars studying Chinese issues believe that this move is due to the CCP’s concerns about the potential social unrest that could arise from large-scale unemployment, especially among young people, which could lead to political instability. Therefore, they are resorting to their usual tactic of “united front work” to attract investment from private enterprises and stabilize employment.
According to the “2026 Report on the Development of China’s Private Economy” released in May this year, there has been a sharp decline in the growth rate of the number of private enterprises in China in 2026, which could further worsen the already declining economy in China.
The report was produced by the Sourcing Institute, a think tank in Beijing specializing in industry research and data analysis.
As of the end of April 2026, the total number of private enterprises in China reached 63.87 million, with a year-on-year growth rate of 4.2%, much lower than the previous four years: 16.6% in 2022, 17.8% in 2023, 15.3% in 2024, and 15.7% in 2025.
Small and micro-enterprises with registered capital of less than 1 million yuan account for 48.39% of all private enterprises, indicating that small and micro enterprises form the foundation of the private economy.
Private enterprises play an indispensable role in supporting China’s overall economy. They are often characterized by the “56789” contribution features: contributing over 50% of tax revenue, over 60% of the GDP, over 70% of technological innovation, over 80% of employment, and over 90% of total enterprises in China.
According to official data from the CCP, the tax contribution of private enterprises in China has been growing at an average annual rate of 6.8%, higher than the 4% growth rate of state-owned enterprises. Between 2025 and 2026, private enterprises contributed over 60% of tax revenue, making up 96.7% of the total number of enterprises in the country (it was even higher at 98% in 2020) and accounting for over 92% of high-tech enterprises.
Amid the backdrop of a cooling real estate market, manufacturing industry relocating, and weak consumer demand in the Chinese economy, the foreign trade activities of Chinese private enterprises have remained stable, maintaining their position as the largest foreign trade entity in China for many years, accounting for as much as 57.3% of the current total foreign trade volume in China, highlighting the pivotal role of the private economy in China’s economic development.
As China begins its “14th Five-Year Plan” (2026-2030), the significant drop in the number of private enterprises poses a “dark cloud” over the country’s economic development prospects for the next five years. This situation has made the CCP deeply uneasy, prompting even the United Front Work Department to openly engage in “guiding” private enterprises.
On September 9th, Ma Liwai, Deputy Minister of the United Front Work Department of the CCP, stated during a news conference at the State Council that in the next five years, the focus should be on guiding the vast number of private enterprises and entrepreneurs to seize the opportunities of the “14th Five-Year Plan,” strengthen their industries, develop “new productive forces,” and contribute to the high-quality development of the economy and society.
Ma Liwai also mentioned that the United Front Work Department, in collaboration with the All-China Federation of Industry and Commerce, will conduct “education and dissemination” activities for private enterprises, focusing on four aspects of “overall trends, path guidance, fostering sentiments, and setting benchmarks.”
Associate Professor Feng Chongyi from the China Studies Center at the University of Technology Sydney explained to Epoch Times that the current Chinese economy is in a dire state, with severe deflation, intense internal competition, and a lack of investment willingness among business owners, leading to a decline in production and job creation. This poses a significant threat to the Communist Party, prompting Xi Jinping and the central leadership to take action. They have tasked the United Front Work Department to reach out to private enterprises, regardless of the effectiveness, to serve the CCP’s objectives.
Chinese issues scholar Wang He also told Epoch Times that private entrepreneurs are important targets for the CCP’s united front work because they are part of the wealthy class. The CCP always demands them to promote “common prosperity,” requiring them to invest according to the CCP’s directions.
However, Wang He pointed out that private entrepreneurs are not naive. Investing in such an economic situation would be self-destructive. Therefore, the United Front Work Department, as a government agency, must intensify efforts to control private enterprises. This reflects the current predicament the CCP faces and its need to exert more pressure and control over private enterprises.
Feng Chongyi elaborated that the CCP’s “eight democratic parties” include the “China Democratic National Construction Association,” which was originally composed of private entrepreneurs and business owners from the late Republic of China period. These groups were co-opted by the CCP.
Additionally, there is the “All-China Federation of Industry and Commerce,” abbreviated as “ACFIC,” emerging in the form of a “civilian chamber of commerce,” clearly indicating in its statutes that it belongs to a “united front organization led by the CCP,” responsible for “uniting and connecting private sector personnel.”
“In the early 1950s, the heads and committee members of the Democratic National Construction Association and the Industry and Commerce Federation would enter the People’s Congress, especially the Political Consultative Conference, where they had seats, and these people would be directly under the control of the United Front Work Department,” Feng Chongyi said. “It has been more than 70 years, and it has always been managed this way. What are they managing? They want to make sure that these ‘active elements’ in private enterprises, those with political ambitions or aspirations, or those seeking promotion, wealth, and development opportunities in China, all align with the CCP and follow the party’s lead.”
Business owners today have to join these organizations to survive under the CCP, seeking political protection. Based on their status and financial resources, different enterprises establish connections with various levels of officials or the government to gain protection. If you want to open a store without political protection, all kinds of local officials, health department officials, environmental protection officials will come to extort money from you, and you will be endlessly blackmailed, so you’ll have to pay for protection.
Feng Chongyi added, “Many business owners come in with these intentions. Therefore, being managed by the United Front Work Department has become a ‘norm.’ Some actively engage with the CCP, with the United Front system, primarily seeking political protection.”
Feng Chongyi stated that the main purpose of the CCP’s united front work with private entrepreneurs is to squeeze blood and sweat money from business owners to support public security funds, defense spending, and various expenses, including the substantial bureaucratic system of the CCP which requires high taxes to maintain.
Especially in the current economic downturn and the soaring unemployment rate, Feng Chongyi believes that the CCP is eager to engage with private enterprises to encourage them to invest more, hire more, and earn more, while also preventing dissatisfaction and opposition among young people due to unemployment.
“If businesses stop producing and close down, the CCP’s tax revenue will plummet. Nowadays, young people can’t find jobs, many students are lying flat because there are no attractive job opportunities for them, some become idle, some may cause troubles. If there is widespread unemployment and closures, many issues could lead to social unrest. Therefore, the United Front Work Department should be under the command of Xi Jinping and the central government to encourage these entrepreneurs to invest actively, at least making a profit and earning money to give to them (the CCP bureaucrats).”
Wang He also mentioned that many private enterprises in China are currently struggling. “If private enterprises do not have a good time, it will bring about a large number of unemployment, affecting the CCP’s tax revenue and the general economic situation.” He said, “The overall economic situation is like this. The CCP preaches about the ‘bright prospects of the economy,’ but the economy is not really thriving. So with the current uncertainty in China’s economic situation, private enterprises are definitely contracting.”
Wang He pointed out that the so-called “new quality productive forces” the CCP is trying to absorb have very few labor resources, and to “stabilize the overall situation,” the CCP still relies on traditional enterprises to “maintain employment and production,” “hire as many employees as possible, and minimize layoffs,” so that the entire economy can remain relatively stable. “Otherwise, in the event of serious overcapacity in these private enterprises and traditional industries, there will be a significant contraction or a large number of bankruptcies, which will have a severe impact on the entire Chinese economy and result in a large-scale unemployment.”
Feng Chongyi remarked that the current market is “unprofitable,” with low investment returns, especially as Xi Jinping’s centralization has worsened the business environment, with increasing taxes, control, and regulations. Consequently, many business owners have chosen to “lie flat” and disengage, reducing their dependence on the CCP and the United Front system. This has made the United Front Work Department very nervous, prompting them to enact new policies and actions to deal with the current crisis.
Deputy Minister Ma Liwai of the United Front Work Department also called on private enterprise owners during the September 9th news conference to actively “benefit society” and embody “wealth with responsibility, wealth with meaning, and wealth with love.”
Feng Chongyi explained that the United Front Work Department is a “political organization” with two primary united front tactics. One is to offer “benefits,” such as appointing them as political advisers or granting them certain official positions to satisfy their desires for power, money, or status—luring people onto the “thief’s ship” with influence and favors.
The other tactic is to give them a “verbal pat on the back,” promoting concepts like patriotism and conducting political and ideological work. This is their political action, appealing to support the CCP. The party now calls for “new quality productive forces,” advocating “patriotism,” and how to behave to showcase their loyalty to the CCP.
In the business community, there are always people pursuing fame or profit who will respond to the United Front Work Department’s call, Feng Chongyi noted.
“Some may not have much ability, but with the CCP’s call, they get opportunities to serve as ‘patriotic businessmen’ or ‘red-hatted businessmen,’ handing them business opportunities or projects. They will eagerly embrace these opportunities,” Feng Chongyi said.
Feng Chongyi stated that in times of economic weakness and in a market that’s “unprofitable,” some people may choose to “grease the wheels,” moving overseas, transferring funds or simply “lying flat.” Nonetheless, there will always be speculators who cozy up to the CCP to seek their own benefit.