Capitalism in China persists.
In the heart of 2025, China is actively fostering private sector growth and innovation within a framework of legal support, policy precision, and sustainability goals. This shift is driven by the recent enactment of the Private Economy Promotion Law, effective May 2025, which legally clarifies and secures the private sector's vital role in China's socialist market economy and modern national development.
The law emphasizes the promotion of innovation, the creation of a fair and competitive environment, support for corporate financing, and administrative improvements. It also focuses on protecting rights and streamlining legal responsibilities to foster sustainable, high-quality development. President Xi Jinping has reiterated the commitment to guarantee a level playing field for private companies, safeguard entrepreneurs’ rights, and intensify efforts to address persistent challenges faced by private businesses.
In terms of innovation in the technology sector, China has rolled out broad tax and fee reductions amounting to approximately 9.9 trillion yuan (about $1.4 trillion) from 2021 to mid-2025, heavily favoring the private sector’s growth. The government also supports making key scientific and technological infrastructure accessible to private firms, encouraging them to take active roles in advancing science and technology and building modern industrial systems.
Regarding sustainable development, recent policy shifts focus on addressing structural inefficiencies and curbing excessive competition. Tighter capacity regulation in industries such as electric vehicles, batteries, and solar panels is aimed at preventing overcapacity and resource waste. The property sector strategy also reflects a move away from speculative growth towards high-quality urban renewal supporting sustainable infrastructure development.
China's regulatory measures are aimed at addressing the fact that companies have developed much faster than regulations. Investing in China requires being in line with the government's plans and keeping an eye on the five-year goals. The Chinese government is placing greater emphasis on enhancing its national economic security, particularly in light of the trade war with the US.
However, the crackdown on private companies in the education sector is a different matter from previous regulatory cycles. President Xi has stated that he does not want private capital in the education sector, as it contradicts state goals such as increasing the birth rate and social equality.
The number of Covid infections in China is currently increasing, particularly with the Delta variant. To combat this, China has already begun easing monetary policy in recent weeks by lowering the reserve requirement ratio for banks. The discount on companies in China is expected to increase due to some political uncertainties.
Despite these challenges, the best companies have adapted very flexibly to changing regulations in China. China has announced that it has achieved its goal of eradicating poverty. The Chinese government's stance of strong support towards private sector growth, sustainable development, and innovation, especially in the technology sector, makes China continue to be an important source of investment opportunities for firms like Jupiter Asset Management, as strategic leader Nick Payne focuses on global emerging markets.
References:
- China's Private Economy Promotion Law
- China's Support for Private Sector Growth
- China's Shift Towards Sustainable Growth
- Xi Jinping's Commitment to Private Sector
- China's Education Sector Crackdown
- The new Private Economy Promotion Law, focusing on innovation, competition, corporate financing, and legal structure, is a significant step in the finance sector, boosting potential for investing in China's private businesses.
- In the technology sector, China's strategic moves, such as tax reductions and infrastructure access, present lucrative opportunities for investing, as evidenced by firms like Jupiter Asset Management targeting China's growth in global emerging markets.
