The State Administration of Industry and Commerce (SAIC) has said that individually owned companies have seen stable development in China, despite concerns over the sector's health, People's Daily reported Tuesday.

According to statistics released by the SAIC, the number of individually owned businesses was 23.8 million in 2002, and it was 23.5 million in 2004, a 0.85 percent decrease annually on average. But from 2005 to 2011, the number increased by 7.3 percent per year on average.

The decrease from 2002 to 2004 was mainly owing to the overall economic climate during the period, said Ma Fu, director of the Department for Regulation of the Private Economy under the SAIC.

However, experts said that in the future, the number of individually owned businesses is likely to decline as large-scale companies in China and from abroad gradually increase their control over China's market.

"Between 1978 and 1986, individually owned businesses could be seen opening up all around China, with an annual average growth of 74.6 percent," Chen Naixing, a researcher with the Chinese Academy of Social Sciences, told the Global Times Tuesday.

"But with the expansion of larger companies in China, it has become harder for smaller individually owned firms to survive," Chen noted.

"It's more difficult for individually owned businesses to seize market share, and now they are mainly found in rural areas or among residents' communities," said Chen.

Ma said the government has kept making policies to create a favorable environment for the development of the private economy.

However, Zhang Lei, a macroeconomic analyst at Minsheng Securities, said that government policies could not save individually owned businesses from decline, as the market will play the principal role in deciding their future.