BEIJING, March 6th (AMSP/CGTN) – – Analysis by Cheng He, Chief Editor, Business News Department, CGTN:
In the highly-anticipated 2025 government work report during China’s ongoing Two Sessions, two ‘animals’ have been included for the first time–unicorns and gazelles. China will support the development of unicorn and gazelle companies in 2025, according to the report submitted to the national legislature for deliberation.
A gazelle company is a high-growth company that has been increasing its revenues by at least 20% annually for four years or more, starting from a revenue base of at least $100,000. On the other hand, unicorns typically refer to private companies with a valuation surpassing $1 billion. Both terms are commonly used to describe high-growth and innovation-driven firms that represent the most advanced force in a country’s economy. They embody the “new quality productive forces” China has been promoting in its transition from the old growth model to high-quality development.
The terms were last mentioned in a comprehensive document after the CPC Politburo meeting at the end of July, 2024.
Back then, unicorns and gazelles instantly reminded me of two other animals–black swans and gray rhinos–embodiment of the daunting challenges China was facing both home and abroad.
Domestically, the real estate sector, along with its related industries, which collectively represent over 20 percent of China’s GDP, was still not showing clear signs of decisive recovery. The complexity and large amount of local debt further complicated the situation. According to IMF calculations, China’s central government and explicit local government debt accounted for 55 percent of GDP by the end of 2023, which is deemed relatively safe. However, when factoring in local government financing vehicles and other government funds, the debt level is an alarming 116 percent of GDP. On the global stage, the decoupling campaign led by the United States presented challenges for crucial technology access, accelerated relocation of industrial chains out of China, and a decline in exports.
Can emerging new technologies, sectors, and business models effectively fill the void left by the traditional model in China’s economy? Can gazelles and unicorns prevail over black swans and gray rhinos?
Looking at this question, one might get a more positive answer now than in July, as within just a couple of months, the emergence of home-developed DeepSeek, Xiaomi Su7 Ultra, dancing robots of Unitree, among other jaw-dropping technological advancements, has changed the valuation of Chinese assets by global investors and views by many on the prospects of the Chinese economy.
A report from Bloomberg Economics also forecasts that China’s high-tech sector will contribute to 19 percent of the country’s GDP by 2026, a significant increase from 11 percent in 2018. The combined exports of EVs, batteries, and solar panels could potentially elevate this proportion to 23 percent, effectively compensating for the anticipated decline in the property sector from 24 percent to 16 percent of China’s GDP.
Behind the projections are the increasing number of gazelles and unicorns in China. China boasts the second-highest number of gazelle companies globally, with 258, trailing only behind the U.S. with 330, as per the Hurun Future Unicorns-Gazelles 2024 report. Additionally, another report by the same organization reveals that among the top 10 unicorns in the world, China and USA each had four of the Top 10.
On the black swan and gray rhino side, a slew of supportive measures have stabilized the property market, with yearly drop of housing prices narrowing nationwide. On the local debt side, Beijing was trying to bring local debts out of the shadows and transform them into explicit local government debt for better monitoring. Simultaneously, it seeks to replace short-term, high-interest debt with long-term, lower-rate debt, adopting a “time for space” approach. Specifically, a 12 trillion yuan debt-relief package announced at the end of 2024 is expected to cut debts local governments need to address from 14.3 trillion yuan to 2.3 trillion yuan by the end of 2028 .
As unicorns and gazelles appear again in key government documents at the start of 2025, it looks they are better positioned than half a year ago to prevail against black swans and gray rhinos in China.
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