It is fashionable these days to announce claim that that China’s private sector accounts for half or even two-thirds of the economy but nothing can be further from the truth, in my view. Despite two decades of deregulation and privatisation, the private sector still lives in the state’s shadow and has limited access to finance and markets. This debate is not academic because it is about the efficiency and sustainability of the world’s fastest growing major big economy. It is also important to the understanding of China’s business cycles.

Let us look at some simple facts.The private sector makes up about 40 of the 1,600 Chinese companies listed on the domestic and overseas bourses and their combined market capitalisation is less than 3 per cent of the total. In the banking market, less than 10 per cent of credit goes to private enterprises. Official data shows that the private sector is responsible for less than one-third of gross domestic product. In terms of asset values, the private sector it is even smaller. Despite inaccuracies in the official data, I see no reason to reject them in favour of non-government estimates.