In an apparent nod to concerns of political favor for the state-run sector, Xi, according to Xinhua, called for a level playing field for private business and said the Communist Party of China should pay more attention to its needs.

China’s private sector is diverse, consisting of behemoths such as internet companies Alibaba and Tencent as well as smaller companies that form the backbone of the country’s manufacturing.

The debt campaign, which China has had to tone down amid the trade war, along with other policies, dealt an outsized “negative” blow to China’s private companies, Japanese financial firm Nomura said.

“So we view these latest moves by Mr. Xi as an apparent effort to boost market confidence at a time when China’s economic growth faces a worse-than-expected slowdown, its stock markets have tumbled and the private sector is being financially squeezed,” it said in an analysis the day after he met the entrepreneurs.

Xi’s internal outreach came just days before a speech Monday in Shanghai directed at foreign governments and investors in which he pledged to increase imports, further open the economy and strengthen intellectual property protections — all key demands of the United States.

Both the meeting with domestic companies and the Shanghai speech appeared to be part of a two-pronged strategy, according to Citi.

“After re-assuring Chinese private entrepreneurs, the government is looking to convince foreign investors and multinational corporations that their participation in China’s economic development is welcome,” the U.S. bank said in a Monday note.

“While these messages will allay the worst fears about the direction of China’s economy, we believe confidence will take time to return,” it added.

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Mark Jolley, equity strategist at CCB International Securities in Hong Kong, called Xi’s approach to the private sector a “positive” because it is small companies that drive job growth.

“It’s something which is quite important because, obviously, if small business is suffering for too long, China loses its dynamism as an economy,” Jolley said.



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