China’s private firms back in driver’s seat as regulations ease: Goldman Sachs

“The tide has turned” for China’s private enterprises, said analysts with Goldman Sachs, as regulatory restrictions are being lifted to help non-state firms pursue breakthroughs in cutting-edge technology and expand their international presence.

The private sector’s “animal spirits” are making a return, with investment patterns suggesting a renewal led by capital expenditure, more aggressive overseas expansion plans, research and development spending and heightened fundraising activity, the investment bank said in a report published on Sunday.

“The sustainability of the rebound hinges largely on more predictable policy and regulatory frameworks, forceful macro stimulus to circuit-break disinflationary expectations and more stable US-China relations,” researchers said.

China’s private sector accounts for roughly 60 per cent of the country’s gross domestic product and 80 per cent of urban employment. It contributed to two-thirds of national tax revenue in 2024, but only received 30 per cent of outstanding bank loans in the same year, the report said.

The sector bore the brunt of nearly three years of strict pandemic restrictions, as well as wide-ranging regulatory crackdowns on industries like real estate, technology and private tutoring.

This year, however, Beijing has telegraphed its support to the private sector as the country turns inward for economic momentum amid an intensifying economic rivalry with the United States.

In February, President Xi Jinping hosted a meeting with China’s top entrepreneurs – the first gathering of its kind since 2018.

South China Morning Post