As global economic growth falters, there is a growing desire for a thriving entrepreneurial spirit. The World Economic Forum’s 14th Annual Meeting of the New Champions recently held in Tianjin, resonates strongly with current realities. In his opening speech, Premier Li Qiang argued that in an era filled with uncertainties, the market insight and understanding of entrepreneurs is crucial for injecting a greater degree of certainty. Indeed, infusing more certainty into uncertain times is an unequivocal social responsibility of global entrepreneurs. Concurrently, governments worldwide should provide a conducive, stable, and predictable macro-environment that mitigates systemic uncertainties and allows the entrepreneurial spirit to flourish.
Currently, as the impact of the pandemic recedes and more and more people are against meeting in person, large conferences like are taking place. An intriguing phenomenon has emerged: despite the commercial nature of these forums, guests often turn their attention to geopolitics in their private discussions, speculating on potential flashpoints and hot topics, only to remain perplexed after anxious exchanges. As one entrepreneur lamented, "Even bad certainty is a form of certainty” — an indication of the intense difficulty they have in dealing with uncertainty. The reasons for this phenomenon are clear. The past few years have seen dramatic changes worldwide: the Covid-19 pandemic has jolted economic and social development; sentiments of unilateralism, protectionism and anti-globalization have spread; great power relations are murky and unpredictable; geopolitical crises have appeared one after another. So much so, that leaders seem to have little energy to focus on once hotly debated global issues such as climate change and the aging population.
At the heart of the so-called “entrepreneurial spirit” lies innovation and risk-taking, an intangible yet invaluable factor of production. Here, it’s crucial to distinguish between two concepts: risk and uncertainty. Different economic schools of thought interpret these differently. The more widely accepted view posits that risk pertains to an event with an unknown outcome, yet the decision-maker knows the possible range of outcomes and the probability of each. Consequently, anyone with the same information and beliefs would make the same prediction. In contrast, uncertainty is characterized by the lack of knowledge about the possible range of outcomes, let alone their probabilities. Both risk and uncertainty are part of the global norm. Skilled entrepreneurs excel at identifying, managing, and even profiting from risks. However, they’re ill-equipped to handle uncertainty. Uncertainty can further be divided into systemic and non-systemic categories. Uncertainty arising from the unique aspects of a company’s production and operations falls into the latter, whereas uncertainty stemming from macro policies and international relations is a classic example of the former.
Presently, the systemic uncertainties preventing the entrepreneurial spirit from being unleashed are particularly pronounced, some of which are man-made, unnecessary and should be eliminated if possible. It’s unclear who stands to benefit in the long run from such systemic uncertainties. Internationally, the “decoupling and disconnection” among large economies directly impacts businesses worldwide. In China’s case, the consequences of numerous contractionary policies introduced in recent years are becoming evident, necessitating urgent rectification.
Recently, the influx of multinational corporate leaders visiting China and receiving a warm welcome from the Chinese government has presented an opportunity for Chinese leaders to signal their commitment to further deepening reforms and expanding openness. The participation by the head of the central government in this year’s World Economy Forum event in Tianjin, often called “Summer Davos” aligns with this sentiment. Notably, many foreign entrepreneurs adopt a low profile during their visits to China, opting to observe and listen more while speaking less. Some even preemptively tell the media not to report on their visits, indicating their cautious and challenging stance driven by systemic uncertainties. While they are keen on hearing Chinese officials’ policy explanations, they are more closely observing the conditions of Chinese businesses and entrepreneurs.
Humanity can only envision a brighter future if governments around the world adhering to principles of openness, sincere cooperation, peaceful coexistence and mutual benefit. As Li stated in his speech, “What we lack in today’s world is communication, not barriers; cooperation, not confrontation; openness, not closure; peace, not conflict.” The Chinese government has repeatedly affirmed that its doors to openness will only continue to widen, striving to create a new pattern of comprehensive openness. Simultaneously, it is fully deepening systemic reforms. Only in this way can certainty be fundamentally infused into the entrepreneurial spirit.
In China’s case, the economy has gradually returned to normal this year, but growth has not met expectations and private enterprises are facing numerous operational difficulties. Some overseas observers have asserted that the “Chinese economy has peaked.” Domestically, calls for the central government to implement robust stimulus policies are widespread, and it’s believed that government departments will handle these prudently. Meanwhile, governments at all levels continue to advocate for bolstering confidence, improving expectations, and prioritizing the enhancement of the business environment. This is not a far-off solution to an immediate need, as some critics suggest, but a measure that complements optimizing macro-control policies. Surveys by relevant institutions show that entrepreneurs hope to strengthen property rights protection and continue to raise the level of rule of law in government actions. Specifically, they call for further expanding market access, enhancing fairness in obtaining factors of production, such as addressing the persistent problem of difficulties and high costs of financing for private enterprises. At present, they are particularly concerned with policy transparency, stability and predictability. Some experts suggest that before policy implementation, the opinions of all market participants, especially various types of business groups, should be fully considered, with necessary lead time, transition periods or buffer periods set. This suggestion is reasonable, as the introduction of policies should avoid catching businesses off guard.
Over the past few years, successive reassurances have been offered to private enterprises, the intentions behind which are earnest and heartfelt. However, the crux lies in taking active steps and implementing comprehensively, striving to minimize systemic uncertainties for businesses. Entrepreneur concerns are distinctly clear and concrete, their validity and necessity evident, meriting serious and sincere responses. As the old saying goes, “Those with steady assets have a steady heart.” Facts prove that only with a steady heart can one secure steady assets, a principle that holds true for individuals, businesses and nations alike.
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