On November 10th, the Chinese Communist Party (CCP) introduced new measures to promote private investment, encouraging private capital to participate in the construction of railways, nuclear power plants, and even potentially enter the commercial aerospace field. However, several experts have analyzed that given the current poor performance of the Chinese economy, relying on private investment as a life-saving measure is another way for the CCP to exploit the public. Private entrepreneurs have been deceived by the CCP numerous times in the past and are now wary of falling into the same trap again.
The State Council of the CCP issued a document titled “Several Measures to Further Promote the Development of Private Investment” on November 10th. It includes 13 policy measures aimed at supporting private capital to participate in projects like railways, nuclear power, hydropower, electricity transmission, oil and gas pipelines, liquefied natural gas imports, and even engaging in the “orderly participation” in commercial aerospace infrastructure construction. The document also supports capable private enterprises to “take the lead in undertaking major national technology development tasks,” with private capital allowed a shareholding ratio of over 10% for qualified projects.
Economic scholar David Huang, currently residing in the United States, told the Epoch Times that sectors such as railways, nuclear power, and aviation are not inherently market-oriented industries but rather are “highly politically risky with low financial returns, even prone to losses, as they are national strategic projects.” While private enterprises are now permitted to hold stakes in these projects, the investment direction, returns, and exit mechanisms remain under the strict control of the CCP.
Chinese affairs expert Wang He mentioned that China’s economy has long relied on investments, yet this year has seen negative growth in investment, including both private and foreign investments.
“Due to the dire state of the economy, the CCP aims to save itself by attracting private investment. Therefore, it has opened up many industries that were previously off-limits to private investment, hoping to attract massive private investments to reverse the trend of negative growth and boost the economy through private investments to overcome the crisis,” said Wang He.
According to data released by the CCP’s State Administration of Foreign Exchange (SAFE) on November 7th, foreign direct investment (FDI) in China by foreign enterprises dropped to $8.5 billion in the third quarter of this year, a 51% decrease from the second quarter, and a staggering 92% drop from the peak in the first quarter of 2022.
Official figures for China’s GDP growth rate in the third quarter this year also decreased to 4.8%, lower than the 5.2% in the second quarter and 5.4% in the first quarter. While these numbers are widely considered inflated, the downward trend is evident.
Tian Xie, a professor at the Moore School of Business at the University of South Carolina, stated that in the face of the overall collapse of the Chinese economy, the CCP is releasing sectors previously under government control to attract private capital and shift research and development risks onto the private sector, continuing to exploit private businesses.
David Huang also believes that in the current context of China’s “overall economic capital circulation depletion,” the absorption of private funds by the CCP is essentially a “financial emergency operation” to make the private sector the “passive lifesavers” of national projects and to use private capital for “social stability and fund allocation” to stabilize social confidence and employment, while easing the CCP’s financial pressure.
The document outlines the need to “promote the development of private investment” by clearing unreasonable “access restrictions,” standardizing “new cooperation mechanisms,” implementing relevant “bidding and tendering system regulations,” and supporting small and medium-sized enterprises to “increase government procurement.”
Wang He pointed out that China’s economy transitioned from a planned economy, with state-owned enterprises and central enterprises holding a dominant position post-transition where various resources were tilted toward them. Profitable industries are mostly controlled by these entities.
“For China’s economy to open up, it needs to break the monopoly of state-owned enterprises. Many economists have proposed abandoning state ownership, allowing all enterprises to freely and fairly compete in the market,” Wang He said.
However, he added, “For the CCP to entirely break the monopoly of central enterprises and fully open up the service industry, especially profitable sectors like banking, telecommunications, and oil exploration, would involve a massive restructuring of the vested interest layers in the entire interest structure. Therefore, the CCP is currently incapable of doing so.”
He believes that the situation for private enterprises in China currently, including market access, “will not fundamentally change.”
Tian Xie stated that the CCP has never truly been willing to relinquish control over the economy or the dominant position of state-owned enterprises. Once private and non-state enterprises reach a certain level of development and size, they are absorbed by the CCP, making it a systemic issue under the Chinese political system. Unless the political system changes, these private enterprises will never truly flourish.
He continued, “The CCP’s desperate attempts to attract private investment and lure people to invest their money are merely wishful thinking in the economic downturn.”
The document also emphasizes the need to strengthen “supervision,” safeguard the “legal rights” of private enterprises, support enterprises in “digital transformation,” help small and micro-enterprises with “financing,” and implement a “green channel” policy for the listing, financing, and merger of key enterprises to “further stimulate the vitality of private investment.”
Wang He bluntly stated that the CCP has been making such promises for decades without ever resolving the issues. “None of these policies have worked in the past several decades, so can they work now given the current situation?”
He cited the case of Jack Ma, who faced CCP suppression when he attempted to get involved in internet finance during his better days.
Jack Ma, 61, has been “retired” for six years, after being forced to step down, once known as the “richest man in China,” now leading a low-profile life away from business activities.
Wang He expressed, “Fundamentally, the CCP is not going to change. You can’t expect a wolf to turn into a sheep. Therefore, all these policies, repeated for decades, are just empty talk. Private entrepreneurs are not fools, and no one believes these things.”
Tian Xie also suggested that after years of repression and deception, Chinese entrepreneurs are now largely awake. He added, “It may not be easy for the CCP to ‘invite them in’ now.”
David Huang stated, “The real vitality of private enterprises is not sparked by documents but by institutional trust, legal protection, market autonomy, and respect for individual private property.”
He believes that in recent years, the CCP’s crackdown on platforms and antitrust enforcement has led to frequent investigations on many private entrepreneurs, creating a “deep psychological shadow” in the market. “Private entrepreneurs understand that in the absence of adequate legal protection, any policy support could be overturned at any time.”
Wang He mentioned that everyone is “very pessimistic” about the current situation and economic direction in China. “No one dares to conduct large-scale long-term investments in China. The uncertainty of China’s future is very high, and everyone is cautious, holding onto cash for the winter.”