Xi vows clear path for private sector

The President provided the most detailed explanation yet of his vision for the private sector's role in China's state-managed economy

President Xi Jinping pledged to remove obstacles faced by private companies in China, while reminding the entrepreneurs that they owe their success to the Communist Party.

In a speech - delivered at a closed-door meeting of mostly business leaders - Xi provided the most detailed explanation yet of his vision for the private sector's role in China's state-managed economy. The remarks follow months of questions about the government's commitment to market-based policies amid stock-market interventions and impatience about the pace of state-sector overhauls.

"The status and function of the non-public sector in our economic and social development has not changed," Xi said. "Our policy of unwaveringly encouraging, supporting and guiding the non-public economy has not changed. Our policy of creating a sound development environment and providing more opportunities for the non-public sector has not changed."

The president made his remarks Friday to a closed-door gathering of delegates from the China Democratic National Construction Association and the All-China Federation of Industry and Commerce. The groups represent private industry in the Chinese People's Political Consultative Conference, China's top advisory body, which is meeting in Beijing. The full text of Xi's remarks was released Wednesday.

Xi noted complaints by small businesses and private entrepreneurs about market barriers, financing hurdles and uncertainty of economic restructuring. He cited business people who referred to these issues as "Three Big Mountains" standing in their way: "The Market Iceberg, Financing Mountain and the Restructuring Volcano."

While Xi said the government was trying to address such problems, he acknowledged a lag between proposal and implementation, which he blamed on bureaucratic resistance in the "last kilometre". "For some reason, the measures that accompany these policies are not very concrete, and some don't land on the ground," Xi said.

The president reaffirmed his pledge to private entrepreneurs amid a stark slowdown in the state sector that's dragging growth to its slowest pace in a quarter century. Growth in output at the nation's bloated and inefficient state-owned companies has slowed to 2.6 per cent, about a third the pace of private firms, according to Bloomberg Intelligence indexes.

At the same, Xi told the business executives that they owed their success to the policies of the Communist Party, which he leads. "The development of China's non-public sector from small to big, and from weak to strong, is realised under the leadership of the party and the country's policies and direction," he said.

The remarks sought to clarify the party's sometimes strained alliance with business forged more than three decades ago, when then-paramount leader Deng Xiaoping shook off Mao-era orthodoxy and unleashed China's economic boom.

The price of participating in the system required business executives to "love the motherland, love the people, love the Communist Party and actively practice socialist core values," Xi said. Entrepreneurs were expected to be philanthropic, produce quality goods and steer clear of corruption.

"Your gestures, words and deeds set a strong example for society," Xi said. "You must cherish and retain your social image."