China private sector sees big-business share drop a second year
CHINA’S regulatory crackdowns and a property-market slump reduced the private sector’s share of the country’s big businesses for the second successive year.
That’s according the Peterson Institute for International Economics (PIIE), which tracked the value share of privately owned companies in the total market capitalisation of China’s 100 largest listed companies going back to 2010. The private sector’s share at the end of 2022 dropped 5 percentage points from the previous year, to 42.8 per cent.
Last year saw the longest-ever slump in China’s property market, following Beijing’s policies to rein in real estate credit – hitting the valuation of large privately owned companies such as China Evergrande Group and Country Garden Holdings, which had dominated that sector.
The shares of private-sector tech groups continued to be affected by a regulatory tightening aimed at that industry.
Part- and wholly state-owned companies account for the rest of the market capitalisation measured by the PIIE. The private sector share peaked above 54 per cent in 2020.
“The data at end-2022 suggest that Chinese President Xi Jinping’s ‘corporate rectification campaign’ started in the summer of 2021 has dealt a heavy but far from lethal blow to China’s hitherto fast-rising private sector,” Tianlei Huang, PIIE China program coordinator, and Nicolas Veron, a PIIE senior fellow, wrote.
The authors noted that the private-sector share of the market capitalisation of China’s largest companies consistently increased in the decade before the pandemic. It remains higher than it was throughout the 2010s, they added.
Following widespread debate among Chinese economists questioning the ruling Communist party’s support for the private sector last year, Beijing in December stepped up rhetorical support for privately owned companies – naming support for the growth of the private sector as one of its top economic priorities for this year.
Xi called this week for efforts to “guide the healthy development of capital,” in a replacement of a tougher-sounding party slogan calling to “prevent the disorderly expansion of capital.” Beijing has also proposed new rules that should make it easier for private-sector companies to list on stock exchanges. BLOOMBERG
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