China needs the private sector to step up

Mon May 16, 2016 7:25am EDT
 
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By Kevin Yao

BEIJING (Reuters) - Xia Xiaokang and Bruno Chen, who both run private-sector companies, are the sort of businessmen that Chinese leaders are increasingly concerned about as economic growth slows.

Beijing is counting on the private sector to invest more in the economy and take up the slack as the government tries to engineer a shift away from largely state-run heavy industry to more entrepreneurial and services-led growth.

Unfortunately, just when China needs the private sector to step up, they look to be stepping back.

"We plan to downsize our business rather than expand," said Chen, who runs Ningbo Tengsheng Garments Co in the coastal export hub of Zhejiang province in eastern China.

"We cannot feel any improvement in the economy," he said.

Xia, general manager of Wenzhou Kingsdom Sanitary Ware Co some 400 km (250 miles) from Shanghai, similarly lacks confidence in the economy.

"We have hardly made any fixed-asset investment since last year and we now plan to rent out part of our factory building because it's too big,” he said.

After March data suggested that economic activity was finally picking up after a long slowdown, April figures released at the weekend suggested otherwise. Overall investment, factory output and retail sales all grew more slowly than expected.   Continued...

 
Hostesses rest during the Auto China 2016 auto show in Beijing, China, April 29, 2016.  REUTERS/Damir Sagolj/File Photo