In a bid to tackle the country’s economic challenges, top leader Xi Jinping recently met with China’s private sector giants. He attempted to downplay the issues, stressing that “some difficulties and challenges facing the current private economic development generally appear in the process of reform and development and industrial transformation and upgrading.” According to Xi, these problems are “partial rather than comprehensive, temporary rather than long term, and can be overcome rather than being insurmountable.” 

China, the world’s second-largest economy in nominal terms and the largest economy in purchasing power parity (PPP), is currently grappling with a series of challenges. These struggles result from policy changes initiated in late 2019 to restructure the economy. Despite its rise to global prominence, China’s economic growth rate peaked in 2007; recent years have seen a noticeable decline in its economic performance. In 2024, China’s economic growth projections were modest, with the International Monetary Fund (IMF) forecasting a growth rate of just 3.3 percent by 2029.

One of the most concerning indicators of China’s economic health is the decline in private investment. According to reports, China’s private investment decreased by 0.1 percent year-on-year in 2024. This reduction is notable as it reflects a drop in the proportion of private investment in total fixed asset investment, which fell from 56.42 percent in 2019 to 50.08 percent at the end of 2024. This marks a significant shift in China’s economic structure dynamics, where private enterprises have long been crucial drivers of economic growth.

Xi and the Entrepreneurs

The private........

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