The Rise and Fall of China’s Private Sector: Determinants and Policy Implications

Abstract

On 3rd November 2020, Ant Group’s world record-setting initial public offering in Shanghai and Hong Kong was surprisingly suspended. In fact, there have been major shifts regarding China’s policies toward privately-owned enterprises (POEs) recently. This study aims to examine the factors behind the rise and fall of Chinese POEs. Based on a Robust Least Squares model, this study finds that China’s economic freedom and economic conditions are significantly associated with the growth of POEs. Finally, this study discusses recent policies and their implications for the Chinese economy.

Keywords: Ant Group; Alibaba; Jack Ma; privately-owned enterprises (POEs); Private sector; Chinese Communist Party (CCP); economic freedom index; economic condition index; China

JEL Classification: B14, B51, L33, L53