When Xi Jinping, China’s leader, made his entrance at a symposium with a group of top entrepreneurs this week, he seemed to be in good spirits.
China has had a few good weeks. The artificial intelligence models by the start-up DeepSeek sent U.S. stocks tumbling and Western commentators screaming, “Sputnik moment.” Then an animated film based on Chinese mythology raked in nearly $2 billion. Mr. Xi signaled that he stood behind the private sector at the meeting on Monday, pushing the Hong Kong stock market to its highest point in three years.
For China, it all provided a respite from two years of malaise — chronic economic problems and challenging geopolitics.
What remained unclear is how much of a lasting boost China’s economy could get from the ingenuity of one start-up, or how much confidence the business community could derive from the sudden friendliness of a leader who has a reputation for distrusting and disliking the private sector. Interpretations of the meeting varied widely.
“Is China,” one social media commenter asked, “now like Shanghai in 1949,” after which the private sector was nationalized under Communist Party rule? “Or is it Shenzhen in 1979,” when China started the policies of reforming and opening up its economy?
“No one knows,” was the response from another commenter, who added that many of the senior leaders in attendance probably didn’t know, either.
Both the lack of confidence and the desire to start anew are real, highlighting the country’s eagerness to get out of its slump and its uncertainty about its leader’s readiness to change course. The private sector also has good reasons to worry that Beijing could meddle more in businesses in the name of supporting them, suffocating innovation and competition.
Mr. Xi summoned the meeting because he saw that the impact of DeepSeek, a mostly unknown start-up until last month, was much stronger than what he tried to achieve through a top-down approach, said Xu Chenggang, an economist at Stanford. “He wanted the private enterprises to help him find a way out of trouble,” he said.
Mr. Xu, who is critical of Mr. Xi’s leadership and was among the first to point out China’s deflationary pressures, said that DeepSeek’s arrival and other positive news could bolster investors’ confidence, and that any persistent momentum could support the economy.
“I don’t think the trend of economic decline will change,” he said. “However, China might be able to escape a serious crisis that started a year ago and shift to a steadier, yet sustained, decline, giving it a chance to catch its breath.”
He said he also did not believe that DeepSeek or artificial intelligence could fix the root of China’s economic woes: weak demand. If anything, it could boost supply by making businesses more efficient, worsening the imbalance.
Mr. Xi has high hopes for private enterprises and entrepreneurs. During the symposium, he told them that they should “firmly position themselves as builders of socialism with Chinese characteristics and promoters of Chinese modernization.” Mr. Xi urged them to pursue high-quality development and enhance independent innovation.
In a nearly 10-minute segment about the symposium on state television, China’s most prominent entrepreneurs, mostly in tech and advanced manufacturing, stood respectfully and clapped vigorously as Mr. Xi walked in. After the meeting, they lined up to shake hands with him.
A couple of the founders wore what’s called the “Xi jacket” — a dark, zippered windbreaker that the Chinese leader often wears and that has become the unofficial uniform of Chinese officialdom. As Mr. Xi spoke, many of the executives, seated before him like university students, were shown on the segment taking notes. Among them was Jack Ma, the founder of the e-commerce giant Alibaba and the online financial behemoth Ant Group, who was the first target of a crackdown on tech that Mr. Xi carried out during the pandemic.
“The meeting felt like a teacher lecturing students,” a venture capitalist who invested in some of China’s most successful tech start-ups told me. “The market reaction surprised me — it was overly optimistic.”
The private sector contributes over 50 percent of China’s fiscal revenue, more than 60 percent of its economic output, more than 80 percent of urban employment and over 90 percent of the total number of enterprises, according to the state broadcaster.
A businessperson who employs thousands of people in China told me that it was in the party’s interest to treat entrepreneurs better. “If the private sector collapses, China’s economy will be gone,” he said.
At the meeting, Mr. Xi talked, as he often does, about his experience working in provinces where the private companies were highly competitive. But his economic thinking can be summed up as: bigger role for the state, and smaller role for the market. Under his rule, China pulled back from pro-business policies that transformed it into the world’s No. 2 economy. It smothered its most successful tech companies, sending accomplished entrepreneurs to early retirement or self-imposed exile.
Now as the country’s economy struggles and artificial intelligence demonstrates its sway in China’s most important geopolitical rivalry, with the United States, Mr. Xi has been showing some warmth toward the private sector.
A founder of a publicly listed company told me that he believed the Communist Party, which does not allow any force to rival it for power, would always be wary of the private sector.
A lawyer specializing in mergers and acquisitions told me that he did not see signs of economic recovery as he walked through Shanghai. But he agreed that it was good that people were talking about the successes of DeepSeek and “Ne Zha 2,” the animated blockbuster. Some investors are hoping that the government will announce more substantial policies during the annual parliamentary sessions in March, he said.
The lawyer, like the other businesspeople I interviewed, asked not to be named for fear of retaliation for speaking publicly.
China’s state media and government have heralded DeepSeek’s and A.I.’s potential to boost economic growth. In the past few weeks, China’s three major telecom operators, the state utility and major oil companies, as well as tech giants like Tencent and Baidu, have announced partnerships with DeepSeek. Some provinces have said they will integrate DeepSeek’s models into their government service systems.
While these deals were good news for DeepSeek and could improve the productivity of these institutions, they could come at the expense of other artificial intelligence companies.
“DeepSeek’s real impact is the destruction of other Chinese A.I. language models,” Jielin Dong, a researcher of China’s tech industry, wrote on X, “as all resources are flowing toward DeepSeek, making it difficult for others to secure funding and market opportunities.” A founder of an A.I. start-up said DeepSeek was significant for China but agreed with Ms. Dong’s assessment that it would divert funding.
The venture capitalist who believed that the market was overly optimistic expressed concern that too much government attention could hurt DeepSeek. The company’s founder, Liang Wenfeng, who attended the symposium with Mr. Xi, is now spending time attending political meetings and pleasing officials high and low, the venture capitalist said.
But that’s a fate DeepSeek and other successful private enterprises might not be able to avoid.
After the symposium, a video skit on WeChat showed a conversation between a mandarin and a businessman in the Ming dynasty. “How exactly should we manage things to bring some life into the market?” the mandarin asked. “Just leave it alone,” the businessman replied.
The video has since been deleted.
