(Bloomberg) -- China’s regulatory crackdowns last year reduced the private sector’s share of the country’s big businesses for the first time in seven years, but probably won’t be enough to send them into retreat entirely.

Of China’s top 100 listed companies by market capitalization at the end of 2021, 49 were privately owned, down from 53 the previous year, according to a report by the Peterson Institute for International Economics. It’s the first time that number has fallen since 2014.

Private-sector companies were hit last year by Beijing’s tough regulation of sectors ranging from internet platforms and education to real estate, an overhaul which fueled a market selloff that at its most extreme erased $1.5 trillion from Chinese stocks.

The market share decline “is thus directly correlated” with the crackdown, the report’s authors wrote, citing the significant drop in value of well-known firms such as DiDi Chuxing Inc, the ride-hailing giant that was probed by cybersecurity regulators and taken off Chinese app stores shortly after a $4.4 billion U.S. initial public offering in June. 

“The perception of dramatically increased policy risk had led to a sharp decrease in Chinese stock prices,” the report’s authors said. 

Despite the crackdown, the longer-term trend suggests the influence of large, private sector firms in China may not be diminished that much, according to the report’s authors.

When Xi Jinping came to power in 2012, the number of private companies among China’s top 100 by market capitalization was just 17, nearly a third the amount at the end of last year.

“Its difficult to say if the fall in the private sector’s share will continue. You are not going to see it collapsing,” said Nicolas Veron, a senior fellow at the Washington-based think tank and co-author of the report.

The private sector accounted for 54% of the total market value of the 100 largest listed Chinese companies in 2020, up from 10% in 2010. The drop to 48% last year was “smaller than we expected,” said Tianlei Huang, who co-authored the report.

“The popular narrative is that during the Xi Jinping era the state is coming back. But when we look at the largest companies, private companies are advancing very quickly,” he added. 

The authors found a similar rise in China’s private sector when looking at the Fortune 500 list, which includes companies not listed on public stock markets. Privately owned companies made up 25% of Chinese Fortune 500 members in 2021, up from 7% a decade before.

The report found the private sector’s share of revenue received by China’s largest companies has increased, but remains significantly smaller than the share received by state-owned companies, both among listed and Fortune 500 companies. That likely reflects the concentration of state-owned firms in sectors such as heavy industry, utilities and finance, where companies often operate as monopolies or duopolies.

Large privately owned Chinese companies include internet platform companies such as Alibaba and Tencent, along with others in pharmaceuticals, consumer services, electronics manufacturing and logistics, according to the report.

China’s ruling Communist Party said in a key document last year that it has “unshakable” commitments to both developing state-owned companies and supporting and guiding the private sector. Privately owned companies account for more than 60% of China’s GDP, according to official statistics.

The Peterson Institute report authors also noted that Chinese state-owned companies receive a variety of advantages such as easier access to bank lending. 

“Our interpretation is despite all the policies under Xi Jinping, the dynamism of the private sector is such that it offsets the policy bias against it,” Veron said.

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