Xi Jinping is trying to love-bomb China’s entrepreneurs

China’s LEADER, Xi Jinping, worries about “black swans” (unexpected crises) and “grey rhinos” (big problems that are ignored). Recently he has started fretting about vanishing unicorns, too. In May he asked a group of bosses to explain why fewer Chinese startups were turning into these beasts, privately-held startups with a valuation of a billion dollars or more. In June the State Council, China’s cabinet, acknowledged that investors were fearful of putting money into risky new ventures and that they were having problems cashing out.

Reviving China’s flagging entrepreneurial spirits has become an urgent priority. As this article was published, the Communist Party’s Central Committee was meeting in Beijing to discuss reviving the economy. During the meeting new figures showed gdp growth in the second quarter of 2024 slowed 4.7% year-on-year, adding to a pervasive sense of gloom. More startup activity could boost growth and technological self-sufficiency, a key Party goal.

China used to breed many unicorns. Between 2016 and 2018 it created at least as many as America and three times more than the rest of the world. But so far this year China has produced only half as many new billion-dollar startups as America. The total in 2024 is likely to be less than one-third of the number in 2021, when China begat a record 109 unicorns (see chart 1). A global slow-down in startup activity is only partly to blame.