Chinese President Xi Jinping is making peace with his country's private companies.

That reassurance comes amid an environment in which privately owned enterprises have taken a hit from banks constricting lending in a national effort to rein in debt. On top of that, confidence has been shaken on concerns private firms were falling out of political favor in relation to their powerful state-owned brethren.

Now, facing trade war with the United States and a slowing economy, Xi is offering the sector an olive branch, which analysts and investors say is necessary to boost confidence in the critical job-providing sector.

China's big state-owned enterprises have long enjoyed exalted status, with preferential access to funding and other benefits. And despite years of reform talk, their political influence has actually been seen to grow in recent years.

But at a symposium last Thursday with private entrepreneurs and reported by the official Xinhua news agency, Xi sought to make amends, promising measures including lower taxes and improved financing, while also offering soothing words of inclusion.

"All private companies and private entrepreneurs should feel totally reassured and devote themselves to seeking development," Xi said at the event, according to Xinhua. "Private enterprises and private entrepreneurs belong to our own family."

Andy Xie, an independent economist formerly with Morgan Stanley, said Xi's words may have a positive psychological impact but action will be more critical.

Xie told CNBC on Thursday that state-owned enterprises have become "emboldened" by an environment that "stresses politics above everything else" in the last five years.

"They've been basically really taking on private companies in a very negative way," he added, citing anecdotal examples of the latter either being forced out of business by state rivals or seeking investment from them to stay in business.