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Fan Baoqun: Regulate Private Firms in Accordance with Market Rules

Apr 19-2024   



A survey of over 100 private entrepreneurs showed that their lack of confidence and worries about the future were to a large extent due to concerns about whether the government can administer by law and follow and respect market rules, wrote Fao Baoqun of the NSD in a commentary. He is NSD Jinguang Chair Researcher, Executive Deputy Director of Think Tank Center. His research focuses on macro-economy and industrial policy, enterprise development and reform policy, as well as corporate innovation.

 

He underlined the unswerving support of the CCP Central Committee for the development of private firms, which account for 50% of tax revenues, over 60% of GDP, over 70% of technological innovations, and over 80% of urban employment. Recently, the CCP Central Committee and the State Council have promulgated a set of new guidelines to promote the development and expansion of private enterprises, which have since been popularly called Private Economy New 31 Guidelines. Fan Baoqun believed the guidelines are both crucial and indispensable and demonstrate the great importance attached to boosting private entrepreneurs’ confidence, stabilizing their expectations and further sparking their vitality.

 

According to the survey, private entrepreneurs had largely positive comments on the clarity and public disclosure of recent national and governmental policy documents. It also indicated that their sense of security and confidence had been greatly boosted by the active communication between senior government officials and private entrepreneurs, the release of policy documents by the CCP Central Committee and the State Council, the constant improvement in law for the protection of private entrepreneurs’ physical and property rights, and the disclosure of exemplary lawsuits by the Supreme People’s Court and the Supreme People’s Procuratorate concerning the rehabilitation of private entrepreneurs.

 

However, many entrepreneurs said that in recent years policy’s incoherence, instability and unpredictability had added to their sense of insecurity, the difficulty in business operation and decision making, and wait-and-see sentiment. Fan Baoqun found that such views on policy uncertainty were echoed by the academia: papers on the topic had surged in quantity.

 

The survey also identified two prominent concerns of private entrepreneurs. The first one involved the fulfillment of contracts and agreements. 60% were concerned about if the government would honor contracts, and 62% were ‘extremely’ concerned about the government’s personnel change leading to failure to fulfill agreements. The second major worry had to do with the lack of proper enforcement of the law and lack of consideration for the actual conditions of enterprises during oversight and law enforcement.

 

President Xi Jinping has stated the importance of the rule of law for the business environment and the socialist market economy, cited Fan Baoqun. Therefore, boosting private entrepreneurs’ confidence should first and foremost start with boosting policy certainty and administration by law, he said. What is needed is to reduce frequent adjustments and sudden changes of fundamental policy that underpins enterprises’ long-term development. In addition, he stressed the importance of full consultation and solicitation of advice when making policy and conducting administrative management, and the need to fully inform private entrepreneurs of policy’s original intentions, goals and directions, as well as arrange for grace periods or buffer periods in policy implementation.

 

When conducting administrative management, the government should be prudent in using administrative orders and abstain from substituting administrative orders for market behavior, he said. Only when the result of administrative management fits with market rules will private entrepreneurs place their trust in the judiciary, and their resort to judiciary means will eventually aid the government to administer by law and improve the overall legal governance of society, he said.

 

Fan Baoqun: Regulate Private Firms in Accordance with Market Rules

Apr 19-2024   



A survey of over 100 private entrepreneurs showed that their lack of confidence and worries about the future were to a large extent due to concerns about whether the government can administer by law and follow and respect market rules, wrote Fao Baoqun of the NSD in a commentary. He is NSD Jinguang Chair Researcher, Executive Deputy Director of Think Tank Center. His research focuses on macro-economy and industrial policy, enterprise development and reform policy, as well as corporate innovation.

 

He underlined the unswerving support of the CCP Central Committee for the development of private firms, which account for 50% of tax revenues, over 60% of GDP, over 70% of technological innovations, and over 80% of urban employment. Recently, the CCP Central Committee and the State Council have promulgated a set of new guidelines to promote the development and expansion of private enterprises, which have since been popularly called Private Economy New 31 Guidelines. Fan Baoqun believed the guidelines are both crucial and indispensable and demonstrate the great importance attached to boosting private entrepreneurs’ confidence, stabilizing their expectations and further sparking their vitality.

 

According to the survey, private entrepreneurs had largely positive comments on the clarity and public disclosure of recent national and governmental policy documents. It also indicated that their sense of security and confidence had been greatly boosted by the active communication between senior government officials and private entrepreneurs, the release of policy documents by the CCP Central Committee and the State Council, the constant improvement in law for the protection of private entrepreneurs’ physical and property rights, and the disclosure of exemplary lawsuits by the Supreme People’s Court and the Supreme People’s Procuratorate concerning the rehabilitation of private entrepreneurs.

 

However, many entrepreneurs said that in recent years policy’s incoherence, instability and unpredictability had added to their sense of insecurity, the difficulty in business operation and decision making, and wait-and-see sentiment. Fan Baoqun found that such views on policy uncertainty were echoed by the academia: papers on the topic had surged in quantity.

 

The survey also identified two prominent concerns of private entrepreneurs. The first one involved the fulfillment of contracts and agreements. 60% were concerned about if the government would honor contracts, and 62% were ‘extremely’ concerned about the government’s personnel change leading to failure to fulfill agreements. The second major worry had to do with the lack of proper enforcement of the law and lack of consideration for the actual conditions of enterprises during oversight and law enforcement.

 

President Xi Jinping has stated the importance of the rule of law for the business environment and the socialist market economy, cited Fan Baoqun. Therefore, boosting private entrepreneurs’ confidence should first and foremost start with boosting policy certainty and administration by law, he said. What is needed is to reduce frequent adjustments and sudden changes of fundamental policy that underpins enterprises’ long-term development. In addition, he stressed the importance of full consultation and solicitation of advice when making policy and conducting administrative management, and the need to fully inform private entrepreneurs of policy’s original intentions, goals and directions, as well as arrange for grace periods or buffer periods in policy implementation.

 

When conducting administrative management, the government should be prudent in using administrative orders and abstain from substituting administrative orders for market behavior, he said. Only when the result of administrative management fits with market rules will private entrepreneurs place their trust in the judiciary, and their resort to judiciary means will eventually aid the government to administer by law and improve the overall legal governance of society, he said.