PIIE Tracker: China's share of companies in private sector saw small uptick in second half of 2024 after years of decline

This is the latest update of the semi-annual PIIE tracker jointly prepared with Tianlei Huang, published on January 9. 

The share of the private sector among China's largest listed companies declined continuously for three years, from 55 percent in mid-2021 to 33 percent in mid-2024. In the second half of 2024, however, PIIE's half-yearly tracker for this metric showed a slight uptick, with the private sector’s share rising to 34 percent by the end of December.

The tracker is based on the methodology defined in a PIIE Working Paper published in 2022. The private sector is defined restrictively as firms with less than 10 percent state ownership. The state sector includes both mixed-ownership enterprises (MOEs), in which the state owns between 10 and 50 percent, and majority-owned state-owned enterprises (SOEs). The tracker shows relative shares of aggregate market capitalization of the top 100 listed mainland Chinese companies ranked by market capitalization, irrespective of whether they are listed domestically or overseas. It thus filters out any general market movements that affect the private and public sectors identically.

In the above-mentioned Working Paper, we had cautioned when observing the initial dip in 2021 that it was “conceivable that the 2021 decline we observed in private-sector market caps could mark the start of a more long-lasting trend reversal. Taking that as a baseline scenario would be adventurous, however, given the longstanding vigor of China’s private sector despite a policy environment that has not been tilted in its favor.”

As it turned out, the end-2021 decline was more than a fluke. However, we also advise against over-interpreting our most recent observation, despite its positive direction. What remains most striking in the 2020s so far is the uninterrupted decline for three years (at our half-yearly pace of observation) of an indicator that had risen tremendously and almost continuously throughout the previous decade. If the private sector’s share continues to rise through mid-2025, that may signal a trend reversal from the slump of the past three years. But for now, it is too early to interpret the latest data with confidence.

Note: We spotted minor errors in our earlier dataset in mid-2023 and mid-2024, which have now been corrected. They are too small to affect the chart in a visible way.

This is the latest update of the semi-annual PIIE tracker jointly prepared with Tianlei Huang, published on January 9. 

The share of the private sector among China's largest listed companies declined continuously for three years, from 55 percent in mid-2021 to 33 percent in mid-2024. In the second half of 2024, however, PIIE's half-yearly tracker for this metric showed a slight uptick, with the private sector’s share rising to 34 percent by the end of December.

The tracker is based on the methodology defined in a PIIE Working Paper published in 2022. The private sector is defined restrictively as firms with less than 10 percent state ownership. The state sector includes both mixed-ownership enterprises (MOEs), in which the state owns between 10 and 50 percent, and majority-owned state-owned enterprises (SOEs). The tracker shows relative shares of aggregate market capitalization of the top 100 listed mainland Chinese companies ranked by market capitalization, irrespective of whether they are listed domestically or overseas. It thus filters out any general market movements that affect the private and public sectors identically.

In the above-mentioned Working Paper, we had cautioned when observing the initial dip in 2021 that it was “conceivable that the 2021 decline we observed in private-sector market caps could mark the start of a more long-lasting trend reversal. Taking that as a baseline scenario would be adventurous, however, given the longstanding vigor of China’s private sector despite a policy environment that has not been tilted in its favor.”

As it turned out, the end-2021 decline was more than a fluke. However, we also advise against over-interpreting our most recent observation, despite its positive direction. What remains most striking in the 2020s so far is the uninterrupted decline for three years (at our half-yearly pace of observation) of an indicator that had risen tremendously and almost continuously throughout the previous decade. If the private sector’s share continues to rise through mid-2025, that may signal a trend reversal from the slump of the past three years. But for now, it is too early to interpret the latest data with confidence.

Note: We spotted minor errors in our earlier dataset in mid-2023 and mid-2024, which have now been corrected. They are too small to affect the chart in a visible way.