China Is Looking for the Next Huawei

Despite all the propaganda complaints, China’s state-owned media remain the go-to place for anyone looking to catch a glimpse of what’s on the mind of Chinese decision-makers. Xinhua Agency’s recent article “Xi Jinping: I Have Always Supported Private Enterprises” certainly warrants attention as it comes on the heels of Chinese president Xi Jinping’s symposium with China’s top enterprises on February 17, both marking high-profile support from China’s political leadership toward private businesses.

The market was swift in its response-Northbound funds saw a net inflow of 60.7 billion yuan in February, the highest in 13 months. Notably, technology leaders like CATL (Contemporary Amperex Technology Co., Ltd.) saw foreign investors increase their holdings by over 5 billion yuan-a result of the combination of Xi’s symposium and the breakthroughs from DeepSeek and Unitree Robotics. Apparently, expectations in China’s capital markets have risen, curbing the risk-aversion sentiment that have pervaded the market earlier.

Signals to Watch For in the Xinhua Article:

To Whom is the Article Addressed?

2022年12月15日，党的二十大后第一次中央经济工作会议。习近平总书记在讲话中谈到民营经济发展时语气坚定：“党的二十大报告鲜明提出‘促进民营经济发展壮大’，这是长久之策，不是权宜之计。”“我是一贯支持民营企业的，也是在民营经济比较发达的地方干过来的。”习近平总书记对民营经济、民营企业的关心支持由来已久。

On December 15, 2022, during the first Central Economic Work Conference following the 20th National Congress of the Communist Party of China, General Secretary Xi Jinping expressed a firm stance regarding the development of the private economy: “The report of the 20th Party Congress clearly proposed ‘promoting the development and growth of the private economy.’ This is a long-term strategy, not a temporary expedient.” “I have always supported private enterprises, and I have worked in regions where the private economy is relatively well-developed.” General Secretary Xi Jinping’s concern and support for the private economy and private enterprises have been consistent over time.

Clearly, the article aims to counter the narrative that Xi Jinping intentionally suppresses the development of private enterprises out of ideological reasons. This narrative reached its peak at 2020 when the Chinese government intensified its regulation of the country’s financial elites. A landmark event was the suspension of Ant Group’s IPO (the parent company of the payment platform Alipay) in 2020. In 2021, Alibaba was found to have engaged in monopolistic practices and was fined 18.228 billion yuan, the largest penalty in China’s antitrust history.

Following these events, one of China’s most prominent business figures, Alibaba founder Jack Ma, virtually disappeared from the public eye, seen by some as evidence of Xi Jinping’s crackdown on private capital. Ma’s return at the February symposium with private enterprises was viewed by many as the pivotal point signaling the thaw between Beijing and private capital.

Chinese President Xi Jinping shakes hands with Alibaba founder Jack Ma

Xinhua’s article, on the other hand, stresses the consistency of Xi Jinping’s governance philosophy. The article directly points out:

2018年，国际形势风云突变，我国发展面临严峻挑战。当时，社会上有的人发表了一些否定、怀疑民营经济的言论，提出所谓“民营经济离场论”“新公私合营论”。习近平总书记对此连续作出回应… “民营经济的历史贡献不可磨灭，民营经济的地位作用不容置疑，任何否定、弱化民营经济的言论和做法都是错误的”…2018年11月1日上午，北京人民大会堂，习近平总书记亲自提议并主持召开民营企业座谈会，50多位民营企业家受邀参加… 习近平总书记鲜明指出：“我国基本经济制度写入了宪法、党章，这是不会变的，也是不能变的。”

In 2018, amid dramatic changes in the international environment, China faced severe challenges. At the time, some people in society made remarks that denied or doubted the private economy, proposing ideas such as the so-called “theory of the private economy exiting the stage” and “new public-private partnerships.” General Secretary Xi Jinping repeatedly responded to these claims…: “The historical contribution of the private economy is undeniable, and the status and role of the private economy are indisputable. Any remarks or actions that deny or weaken the private economy are wrong.”… On the morning of November 1, 2018, at the Great Hall of the People in Beijing, General Secretary Xi Jinping personally proposed and presided over a symposium with private enterprises, attended by over 50 private entrepreneurs. Xi Jinping clearly stated: “China’s fundamental economic system is enshrined in the Constitution and the Party Charter. This will not change and cannot change.”

The Government’s Relationship with Business in China

Regarding the relationship between government and business in China, the Xinhua article made a point to quote Xi Jinping’s remarks made in 2016 to members of the All-China Federation of Industry and Commerce at the Chinese People’s Political Consultative Conference (CPPCC):

我常在想，新型政商关系应该是什么样的？概括起来说，我看就是‘亲’、‘清’两个字。对领导干部而言，所谓‘亲’，就是要坦荡真诚同民营企业接触交往，特别是在民营企业遇到困难和问题情况下更要积极作为、靠前服务，对非公有制经济人士多关注、多谈心、多引导，帮助解决实际困难。所谓‘清’，就是同民营企业家的关系要清白、纯洁，不能有贪心私心，不能以权谋私，不能搞权钱交易。

I often think, what should the new type of government-business relationship look like? In summary, I believe it can be described with two words: ‘close’ (亲) and ‘clean’ (清).’ For government officials, being ‘close’ means maintaining open and sincere interactions with private enterprises, especially being proactive and providing forward-facing services when private enterprises encounter difficulties and problems. It also means paying more attention to private entrepreneurs, engaging in dialogue, offering guidance, and helping resolve practical challenges. Being ‘clean’ means maintaining a straightforward and pure relationship with private entrepreneurs. There should be no greed, no selfish motives, no abuse of power for personal gain, and no collusion between power and money.

It is worth noting that Professor Jin Keyu believes the relationship between government and business in China is the area where China is being most understood. In our exclusive interview with Professor Jin Keyu, she detailed how Chinese local governments provide “nanny-style” services to Chinese enterprises: how the Chinese governments offer the helping hand rather than the grabbing hand to the private enterprises.

China’s Emphasis on Real Economy and Its Ascendency in the Value Chain

At the February symposium, entrepreneurs from high-tech manufacturing industries, such as Huawei’s Ren Zhengfei, BYD’s Wang Chuanfu, Xiaomi’s Lei Jun, and Unitree Robotics’ Wang Xingxing, were seated in prominent positions at the front row. The Xinhua’s article echoes such emphasis on cutting-edge manufacturing enterprises:

今年2月17日召开的民营企业座谈会上，习近平总书记再次提到：“我在福建和浙江工作时，就很认同当地一些民营企业立足实业、聚焦主业、不断做大做强的做法。这两个地方的服装鞋帽企业比较多，现在有的已经引领国际潮流了，很重要的原因就是几十年心无旁骛，一以贯之做这一行，从开始的来料加工到创立自己的品牌，现在成长为世界知名企业。” 习近平总书记强调，要坚定不移走高质量发展之路，坚守主业、做强实业。

At the symposium with private enterprises held on February 17 this year, General Secretary Xi Jinping once again stated:”During my time working in Fujian and Zhejiang, I greatly appreciated the approach taken by some local private enterprises: focusing on real industries, concentrating on their core businesses, and consistently striving to grow bigger and stronger. These two regions have many apparel and footwear companies, some of which have now become leaders in international trends. A key reason for this success is their decades of unwavering dedication to this industry—starting from contract manufacturing to creating their own brands, and now growing into globally recognized enterprises.” General Secretary Xi Jinping emphasized the importance of unwavering commitment to high-quality development, staying focused on core businesses, and strengthening the real economy.

Note the nuanced message: the Chinese government supports high-tech enterprises that are globally competitive, and its support will only grow stronger in the future.

Editor: huyueyue