Shenzhen. Photo: VCG

In a significant move to further bolster the private sector, a crucial driving force for the country's economic output, China announced on Monday that it has set up a bureau specializing in promoting the private economy's development under the country's top economic planner.

The latest arrangement has sent a reassuring signal to domestic private players that the country is resolved to improve the business environment by taking concrete actions to implement previously launched supportive measures in broader efforts to shore up the world's second largest economy, which has been on a bumpy road of recovery in recent months, experts told the Global Times.

The newly launched bureau under the National Development and Reform Commission (NDRC) will strengthen policy coordination in relevant areas, and ensure that relevant measures are implemented as early as possible and achieve tangible results, Cong Liang, deputy head of the NDRC, told a press conference on Monday.

Its major responsibilities include tracking, studying and analyzing the development of the private economy, coordinating and organizing the formulation of policies and measures to promote its development, and formulating policies to promote the growth of private investment, according to the NDRC.

A regular communication mechanism with private firms will also be duties of the new bureau for private economy development, so as to listen to their major problems and figure out solutions.

Following the announcement, China's stock market rallied. The benchmark Shanghai index rose 1.4 percent at Monday's closing, while the tech-heavy ChiNext index climbed 0.85 percent. All the 217 publicly listed shares on the Beijing Stock Exchange (BSE), a major board to drive funding for small and medium-sized enterprises, increased during the morning session on Monday.

"The move of setting up a specialized agency to tackle issues and promote relevant work in the private sector is necessary, and has been long anticipated by the market," Pan Helin, joint director of the Research Center for Digital Economics and Financial Innovation affiliated with Zhejiang University's International Business School, told the Global Times on Monday.

Just like the national data bureau that the country set up in March to advance the development of data-related fundamental institutions and push forward the planning and building of a digital China, the new private economy development bureau is established to respond to major policy deployment in a timely manner.

"Previously, most policies were promoted by several departments in a synergized way with one major department taking the leading role. But this mode has often met with obstacles because those departments, at the same level, advanced their work in an inconsistent pace, thus affecting the implementation of relevant policies," Pan said.

Cong of the NDRC said that promoting the development and growth of the private economy is a systematic project that involves a wide scope, a long policy chain, and various work nodes.

"Now, the problem of inconsistency can be well fixed with the launch of the new bureau, the efficiency of which underscores that Chinese authorities have been attaching vital importance on the private sector," Pan noted.

In the upcoming phase, the private economy development bureau will effectively perform its duties, improve the government-enterprise communication mechanism, strengthen the systematic design of policy promulgation, the tracking and effectiveness of policy implementation, and promote all major plans of the central leadership, Zhang Shixin, an official within the state planner, told the Monday press conference.

Not 'lip service'

Compared with the rollout of heavyweight supportive measures for the private sector in July, which greatly enhanced confidence among private entrepreneurs and boosted morale in the market, the new bureau establishment, which is translating words into action, carries more significance. It is expected to drive up the private sector and reinforce the momentum of domestic economic recovery in the remainder of the year, observers said.

On July 19, Chinese authorities issued a 31-piont guideline to boost the growth of the private economy, promising to improve its business environment, enhance policy support and strengthen the legal guarantee for its development.

"For any valuable policies, the key is to implement it," Feng Liguo, research fellow at Beijing-based Laboratory for National Economic Engineering, told the Global Times on Monday.

Given specific responsibilities of the new bureau, if well executed together with other policies in the country's combined toolbox, it could revive the nation's private economy like "top-to-down refreshment," having a far-reaching influence in the remainder of the year and in the years to come, Feng said.

Feng warned, however, that the effect of policy implementation still needs observation, considering that the downward trend of private investment has not seen a halt.

From January to July, the national fixed asset investment came in at 28.6 trillion yuan ($3.9 trillion), a year-on-year increase of 3.4 percent. Among them, private investment reached around 15 trillion yuan, down 0.5 percent on a yearly basis, data from the National Bureau of Statistics showed in August.

With a mix of forceful policies landing, a stabilized private economy is set to inject certainty into the Chinese economic growth amid challenges, observers stressed. They believe the Monday move is also an affirmation of the country's "two unswerving" stances on equal support for both public and non-public sectors, rather than what some Western media tout as boosting a long-subdued sector with temporary pills for an "ailing economy."

It also slapped in the face of some Western claims that Chinese government support for the private economy is just "a lip service."

Notably, private entrepreneurs hailed the setting-up of the new agency as a shot in the arm.

Chen Liang, general manager of Dongguan Jinconn New Material Holdings Co, a private company that makes magnetic materials, told the Global Times on Monday that "it's like we finally have a backer who can help us to grow stronger."

"I think that experts in the new bureau will take a down-to-earth attitude and formulate a series of policies suitable for the domestic private sector with their expertise," Chen noted.

The new bureau will certainly be a major benefit for private enterprises to participate in the national economic development to a greater extent, a manager surnamed Cao of JA Solar Technology Co told the Global Times on Monday at the sidelines of the ongoing 2023 China International Fair for Trade in Services.

"Enterprises expect the corresponding support," said Cao, who revealed that the company was surveyed by the NDRC for the development of the private sector recently.

Private businesses have played an increasingly pivotal role in spurring economic growth, creating employment and revving up technological innovation over the past decades.

They generate over 50 percent of tax revenue, over 60 percent of GDP, over 70 percent of technological innovation achievements and over 80 percent of urban employment. Private firms also account for 90 percent of the total number of enterprises, according to official data.