Beijing appears to be recalibrating its economic priorities as President Xi Jinping convened a high-profile symposium on the private sector on 17 February. The meeting, held in the Chinese capital, brought together top executives from some of the country’s largest private companies and marked a significant change in tone from recent years, when Beijing’s focus on national security and regulatory crackdowns had cast a shadow over consumer confidence.
Among those attending were Ren Zhengfei, CEO of Huawei Technologies; Wang Chuanfu, chairman of BYD; Liu Yonghao, chairman of New Hope Holdings; Yu Renrong, chairman of Shanghai Will Semiconductor; Wang Xingxing, CEO of Hangzhou Yushu Technology; and Lei Jun, chairman of Xiaomi. Their presence, alongside Alibaba’s reclusive founder Jack Ma, underlined the significance of the event. Xi’s speech emphasised the crucial role of the private sector in China’s socialist market economy, and pledged continued state support and adherence to pro-business policies.
The impact of the meeting reverberated beyond the room, as Alibaba Group Chairman Joe Tsai later reflected at CNBC’s Converge Live event in Singapore on 12 March. “People underestimate the importance of that meeting,” Tsai said. “What that meeting did for the entire entrepreneurial sector, or … the private business sector, is it gave private business people the confidence to invest in their businesses.” He pointed to early signs of a turnaround, noting that companies are expanding hiring and making new investments, which he believes will eventually restore consumer confidence. (Source)
During this year’s Spring Festival, I was in China meeting with top think tanks, policymakers, and business leaders. In Shanghai, over dinner with several private entrepreneurs, I was asked about the implications of this recent symposium. My assessment was straightforward: since 2018, Beijing has prioritized national security across economic, financial, and technological dimensions. That objective has now largely been achieved. With security concerns embedded into policymaking, the focus is shifting back to economic growth. The key question is whether Beijing will now accelerate pro-growth policies or maintain a more cautious approach.
Despite lingering concerns in the West about weak consumer sentiment in China, some multinationals have found reasons for optimism. McDonald’s China is a striking example. In 2017, amid concerns over Beijing’s increased regulatory scrutiny and national security priorities triggered by the Trump administration, McDonald’s sold the majority of its China operations to a consortium led by CITIC Group. However, a reassessment by McDonald’s global executives in 2023 painted a dramatically different picture. During a five-day visit to China, an 11-member delegation studied consumer trends and the fast-food giant’s post-pandemic recovery. Their findings were remarkable: McDonald’s China had expanded from 2,200 stores in 2017 to 6,000 by 2023, with plans to exceed 10,000 locations by 2028. The company’s membership programme had also grown to 260 million.
For Wall Street investors, the long-term high-return commitment of US private equity firm Carlyle, which retains a 20 per cent stake in McDonald’s China, could be a sign of continued confidence in the country’s economic trajectory. At the end of 2023, McDonald’s Global announced that it would increase its stake in McDonald’s China from 20% to 48%. The equity acquisition is expected to be completed in the first quarter of 2024.（Source）
With Beijing once again courting the private sector, the coming months will be critical in determining whether this shift translates into sustained economic momentum or remains a short-term recalibration amid potential black swan events, such as a declaration of independence from Taiwan by the DPP.