Animal Farm spirits

12 October 2017 By Christopher Beddor

The government hopes to regain the private sector’s confidence even as it tightens its grip, in particular on the critical tech sector. Alignment with state priorities could ease red tape, but bureaucrats make lousy CEOs, and vicious factional politics will distract executives.

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The State Council and Central Committee of the Chinese Communist Party unveiled new instructions on Sept. 25 to foster “entrepreneurial spirits.” The People’s Bank of China announced on Sept. 30 a multi-tiered reduction to the reserve requirement ratio – a measure of how much the country’s banks must lock up at the central bank – for banks that meet certain criteria for lending to eligible groups, especially small companies, starting next year.

Private investment growth slowed to 6.4 percent in the year to August, down from 6.9 percent in the year to July. The government has in recent months repeatedly issued new policy guidance intended to boost private investment.

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