Experts and officials suggested China needs more targeted policies to encourage people to start new business and drive innovation.

"Government should reconsider the role it plays in startups' formation and growths to help entrepreneurs better understand policies. There are many supportive policies already in place, but with a lot to improve in intellectual property protection and market regulation, " said chief economist with China National Gold Group Corporation Wan Zhe at the 19th Wenjin Forum held earlier in January.

Last year, China cut more than 300 billion yuan ($46.15 billion) of taxes to boost mass entrepreneurship and innovation, according to the State Administration of Taxation.

Tang Min, counselor with State Council of the Chinese Government, said that China needs more small-scale enterprises in the long term, as China is moving towards a more consumer oriented society.

"Grassroots entrepreneurship will become the key engine that nourishes the growth, and government has its role to strengthen entrepreneurship education and training, and build more platforms for exchanges. Small firms are facing more challenges amid economic slowdown, and they need further support," said Tang.

According to Xin Guobin, vice-minister of Industry and Information Technology, more than 10,000 startup firms are being set up everyday in China amid government support for entrepreneurship, many being small enterprises.

In the face of economic headwinds, when the economic growth has slowed to 6.9 percent in 2015, China is counting on startups to generate new jobs and to revitalize the economy.