Most polled firms lament losses, and few plan to increase investments in the foreseeable future as economic challenges mount.
China’s uncertain economic outlook and subdued demand are straining the bulk of its private enterprises as they grapple with a volatile mix of fragile confidence and a pressing need for stronger policy support, according to fresh survey results from an independent research institute.
Private firms are also proactively recalibrating strategies to survive and thrive in the face of mounting derisking and decoupling pressures, according to the findings posted by Beijing Dacheng on its WeChat social media account on Thursday.
Among the 806 private firms surveyed in late November – most of them small and medium-sized enterprises scattered across manufacturing and service sectors – 52.6 per cent said the private sector was in a difficult situation, and more than 63.3 per cent said they had experienced losses or reduced profits.
Only 16 per cent of the surveyed companies planned to ramp up investment in the next two years. However, no comparison figures were provided.
“Private enterprises are still grappling with high operating costs, recurring payment arrears, and intense neijuan in certain industries and sectors, among numerous challenges,”
the survey said, referring to the unsustainable state of intense internal competition, or “involution”, that leads to diminishing returns and stagnation.
Beijing has stepped up efforts to help and also guide expectations in the private sector, which contributes more than 60 per cent of the national economic output and employs more than 80 per cent of urban workers.
In a Xinhua editorial on Friday, continuing the country’s publicity push ahead of the tone-setting central economic work conference, private firms were encouraged to adapt to market changes and display confidence in the face of challenges.
And the Dacheng survey came with Beijing striving to shore up private confidence, including via the draft of a widely watched law concerning the promotion of the private sector in early October.
The 77-article draft has stipulated measures to promote fair market competition; enhance the investment and financing environment; encourage private firms’ involvement in scientific projects and technological innovation; and also safeguard their economic rights and interests.
However, many surveyed entrepreneurs expressed insecurities, pointing to profit-driven law enforcement and cross-regional “entrapment style” crackdowns by some debt-ridden local authorities.
When asked about the most urgent actions expected from the central government, more than a third of respondents mentioned such local behaviours.
“This has severely undermined business confidence, and we hope the central government will take decisive action to curb such practices and reverse the situation as soon as possible,”
the report summarised.
Meanwhile, 40.7 per cent of those surveyed called for stronger legal protections of property rights and personal safety for entrepreneurs, along with the rectification of cases involving those who had been wronged.
Half of the respondents called for the better implementation of tax cuts and financing support.
“Small and medium-sized enterprises are highly sensitive to policy changes and are significantly impacted by them,”
the report said.
As global supply chains shift away from the China-centred model amid Western decoupling and derisking trends, private firms, especially manufacturers and exporters, are bearing the brunt of the impact.
However, most of them are sharpening their competitiveness or exploring new markets, aware of the need to better integrate into the global supply chain, the report said.
Source: SCMP
