Government Pledges Policy Support and Increased Funding for Emerging Technologies

In an effort to bolster its economy and counter rising tensions with the US, China has committed to expanding its private sector and advancing cutting-edge technologies. Premier Li Qiang, speaking at the National People’s Congress (NPC) on March 5, emphasised the government’s intention to implement policies that will drive private sector growth and provide enterprises with stronger support.

The government will maintain ongoing communication with businesses to address challenges, Li stated, underscoring the need for a service-driven administration that fosters confidence among entrepreneurs. These measures are part of China’s broader strategy to stabilise its economy, which has faced setbacks due to high youth unemployment and local government debt.

To further integrate private businesses into the economy, Chinese lawmakers are expediting the passage of a law aimed at ensuring equal legal treatment for private enterprises and state-owned companies. If approved, it will mark China’s first fundamental legislation dedicated to the private sector, addressing concerns over long-standing advantages held by state enterprises.

The 2025 government work plan also prioritises investment in next-generation technologies, including embodied artificial intelligence, quantum computing, and 6G networks—terms that appear in the report for the first time. While specific figures were not disclosed, funding is expected to increase significantly to drive innovation.

China will also focus on attracting foreign investment by encouraging existing international firms to reinvest and collaborate with domestic businesses to enhance industrial supply chains. Analysts believe these efforts align with China’s economic strategy as trade and technology disputes with the US escalate.

The trade war intensified on March 4, when new tariff increases were announced. Experts view China’s renewed emphasis on private enterprise and advanced technology as a direct response to these economic challenges. Dr Larry Hu, chief China economist at Macquarie Group, described the approach as “Beijing’s counter to the ongoing trade war 2.0.”

President Xi Jinping’s recent meeting with private sector leaders, including Alibaba co-founder Jack Ma, further signals China’s shift towards pro-business policies. The high-profile gathering, the first of its kind since 2018, is seen as a strategic move to rebuild confidence among entrepreneurs following regulatory crackdowns on major tech firms.

The private sector plays a crucial role in China’s economy, contributing around 60 per cent of GDP and employing 80 per cent of the urban workforce. The National Development and Reform Commission has announced plans to increase private investment in key sectors such as railways, nuclear power, environmental protection, and logistics—areas traditionally dominated by state-owned enterprises.

Additionally, China has reaffirmed its commitment to boosting domestic consumption, an economic priority for 2025, as exports are expected to decline due to ongoing global trade tensions. Last year, the focus was on developing “new quality productive forces,” a concept introduced by Xi to push technological innovation and industrial upgrading.

Addressing concerns over unhealthy market competition, Li also vowed to tackle the issue of “neijuan” (or “rat race” dynamics), which has led to aggressive price wars in industries such as e-commerce, automotive, and solar energy. The phenomenon, flagged by policymakers in mid-2024, has been incorporated into the 2025 economic agenda to create a more sustainable business environment.

With these initiatives, China aims to reinforce its economic resilience and technological leadership, positioning itself to navigate an increasingly complex global landscape.