My entrepreneur friend is an experienced real estate developer. Like other developers, he has had to play the game of chance with government policy. Opportunity passes the overcautious, but the blatant breaking of rules incurs a yellow card – or even direct dismissal, a red card. In an environment where the rules are inherently imperfect and subject to change, the balance between observance and rule breaking is much trickier.

The sudden macro-adjustment in the first half of the year was a rude awakening for many entrepreneurs. In the wake of the Longde and Tieben incidents, private enterprises, restricted by a scarcity of resources, find themselves between a rock and a hard place. Banks apply a policy of accepting deposits but not giving loans. Worse still, some banks even ask for the return of loans before they are due. The initial enthusiasm private enterprises had after the 2002 16th National Party Congress is being impacted dramatically by increasingly conservative macro-economic policies. Statistics show that Rmb loans made by financial institutions to private enterprises and the self-employed amounted to US$1 billion in March, but plummeted to US$350 million in April and only US$90 million in May. Loans to state-owned enterprises, meanwhile, were only slightly affected.

Most entrepreneurs understand the macro-adjustment and are supportive of government policy. They are simply yearning for equality. A speech made by Guo Guangchang at a symposium of the All China Federation of Industry and Commerce sums it up: “There is a phenomenon with macro-control, namely, that if there is a problem, the private sector will be the first to be ‘treated'. But if the whole private sector has to be treated as a result of one sick private enterprise, the development of the private economy will be impeded.”

In addition, the root cause of illness is not due to a small number of seemingly sick private enterprises. The purpose of macro-control is to dampen the overheating of the economy. And most experts believe that the current overheating problems are not due to macro-control or economic aggregate, but to institutional and structural problems. The well-known economist Wu Jinglian makes a more definitive judgment: “The overheating of China's economy results from the low efficiency of investment.” Who, then, is to blame for this low-investment efficiency?

The EU's current concern over whether to grant China market economy status is thought provoking. Of the five criteria on the status of market economy set up by the EU, China's economy fails to meet four of them. The EU's report concluded that China's economy is subject to excessive state interference, weak rule of law, and poor administration of companies.

Of course, it takes time to address those problems. The rule of market forces cannot be established overnight, and its application necessitates a comprehensive and solid foundation. Rules are always born with love and pain.

When talking about recent economic phenomena, a friend from Citigroup said that the problem this generation of Chinese faces is a lack of experience of a market economy. They have witnessed no great ups or downs. He added that when selecting a manager for high-risk management, Citigroup is inclined to hire the candidate who has experienced an economic circle or worked for a company with a history of setbacks. After all, wisdom and theory cannot take the place of experience.

I believe that Chinese are good at learning. This round of macro-economic controls is constructive to the rational development of private enterprises. We have the chance to cool down our blind enthusiasm, think about scientific development, ponder over the choice of going on or giving up, and reflecting on how best to make the most of our own ability.