Xi commits to financial access for private tech entrepreneurs

Communist Party "can't change and won't change" support for private enterprise.

Xi Jinping wants to supercharge financial access for China’s successful private tech entrepreneurs.

Beijing hopes this can help China to prevail in the technological cold war between it and the US.

That's the buzz in China after a landmark official meeting between Xi and the country’s top tech tycoons.

Xi meets with Jack Ma and Liang Wenfeng

On 17 February, Xi Jinping held an official meeting with China’s leading private entrepreneurs, including the heads of the country’s top tech companies.

Private sector participants in the meeting include Alibaba’s Jack Ma, BYD’s Wang Chuanfu and DeepSeek’s Liang Wenfeng.

At the meeting, Xi reiterated the Communist Party’s commitment to support for the private sector, stressing its role in China’s rise since the start of the reform and opening era.

“The fundamental policy of the party and the state is including development of the private economy within the system of Socialism with Chinese characteristics,” he said.

“This will be continually upheld - it cannot change, and will not change.”

Beijing will step up financial access for private entrepreneurs

Chinese economists say the key takeaway of the meeting is that Beijing will pursue further reforms to solve the pain points of private entrepreneurs when it comes to financial access.

The meeting called for “continuing to invest greater vigour into solving the problem of finance being expensive and hard to access for private enterprise.”

Economic commentator Mo Kaiwei (莫开伟) writes that financial support for private enterprise in China has continually improved over the past four decades.

The outstanding volume of loans to private companies stood at 71.8 trillion yuan as of the end of November 2024, for a YoY rise of 9.0%. As of the end of 2024, corporations with private enterprise origins accounted for 63.3% of all listed Chinese A-shares.

Mo notes, however, that financing for private enterprise “hit a ceiling” in the wake of the Covid pandemic.

“Financial institutions lack confidence in providing services to private enterprise, and this restrains their further development,” he wrote.

“[They need to] remove all existing impediments in terms of ideology, and continually unveil new forms of financial support for private enterprise development,..further expanding the environment of financial services for private business.”

The message from Beijing should have a palpable effect on China’s financial system, given its domination by state-owned banks that are headed by party members appointed from the top of the political system.

China’s capital market called upon to support private tech

Economic commentator Pi Haizhou (皮海洲) writes that Xi’s meeting with top tech tycoons also sends a strong message about the use of China’s capital markets to solve the financing pain points of private enterprise.

“When it comes to solving the problem of challenging financing for private enterprise, the A-share market can still make more progress,” he writes.

Pi notes that China’s stock market was originally created for the purpose of driving reforms of state-owned enterprises by transforming them into listed, publicly traded corporations.

“Private enterprise was excluded outside the gate of the stock market,” Pi writes.

It was only subsequently that “private enterprise has enjoyed the dividends brought by state-owned enterprises,” and stock exchanges permitted private companies to list.

Efforts to grant Chinese private enterprise improved access to capital markets have accelerated since Xi’s second term in office.

2019 saw the launch of the Shanghai Stock Exchange Science and Technology Innovation Board (STAR Board) - touted as China’s equivalent to America’s Nasdaq, to cater to innovative science and tech companies.

September 2021 saw the opening of the Beijing Stock Exchange, for the specific purpose of servicing small and medium-sized enterprises.

Pi Haizhou notes that since its founding the STAR Board has seen the listing of 1406 new A-shares, to raise 1.58 trillion yuan.

Of these companies 1160 were private enterprises, accounting for over 80% of the total. They raised 1.07 trillion yuan, for a near 70% share of funds raised.

“It’s apparent that when it comes to supporting the development of private enterprise and solving the financing difficulties of private enterprise, the stock market has already made no small contribution,” Pi writes.