China has 206 privately held companies valued at $1bn or more, more than any other country
China’s economy has been hurt by covid-19 is putting it mildly. The 6.8% year-on-year fall inin the first quarter ended a 28-year stretch of continuous, mostly rapid growth. The Communist Party, which derives legitimacy from rising living standards, is keen to put the slump behind it. President Xi Jinping is reversing a harsh lockdown and propping up state firms. But the world’s second-biggest economy will not heal by Mr Xi’s fiat alone.
This zeal may stem from a belief that anyone can make it big. Chen Long, provost of the Hupan School of Entrepreneurship in Hangzhou, a startup-rich city in Zhejiang province, puts his compatriots’ entrepreneurial vim down to “countless examples of success”, which give “a sense that you can change your own fate”.
Unicorns are not, of course, a representative sample of private enterprise. But they nonetheless illustrate that Chinese entrepreneurship is broad as well as deep. According to Vision Plus Capital, a venture-capital firm, a big share of the herd grazes around cities with a high startup density per million residents, such as Hangzhou , Shenzhen and Beijing . But their founders are a more geographically diverse bunch. Hurun lists 112 founders of Chinese startups worth $1.5bn or more.
More recently Dream Town, a state-run startup village near Alibaba’s campus in Hangzhou, has been handing out cash and free office space to promising founders. Xiamen, a city in Fujian, offers the 3,000 startups in its Software Park generous subsidies for rent and research and development. Firms got preferential loans and a two-year waiver on corporate tax, plus a discount for another three.
This increasingly heavy hand is the private sector’s second problem. The party looks more hostile to it than at any time since before Deng set up “special economic zones”, capitalist sandboxes for firms, in the 1980s. Mr Xi favours state-led development over private-sector effervescence, maybe seeing the cult of entrepreneurs as a rival source of authority.
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