The passage of China's first national law dedicated to protecting and promoting the private sector marks a historic milestone, providing a powerful legal guarantee for the sector's development and delivering a significant confidence boost to the vast community, according to experts and entrepreneurs.They highlight that amid global economic upheaval and trade tensions, the new law comes at a critical juncture to empower China's private enterprises one of the key drivers of domestic employment, consumption, and innovation to boost growth.The private sector promotion law was passed on Wednesday at a session of the Standing Committee of the National People's Congress, China's top legislature, following more than a year of legislative deliberations.
It will come into effect on May 20, 2025.The law stipulates that the promotion of the sustainable, healthy and high-quality development of the private economy is a significant and long-term policy of China.From ensuring fair market access and financing support to enhancing services and protection of innovation, the 78-article law cements efforts to encourage, support and guide the growth of the private sector.A milestoneThe private sector has thrived under China's reform and opening-up policy, with authorities providing consistent support over the past decades.At a high-level symposium in February, the top Chinese leadership reaffirmed its steadfast support for the private sector and urged private firms to unswervingly pursue high-quality development.China has taken institutional measures to bolster private sector development by establishing a dedicated bureau under the National Development and Reform Commission (NDRC) specifically tasked with coordinating support for private enterprises.The newly passed private sector promotion law highlights the importance of protecting the legitimate rights and interests of private enterprises.Unlike previous policy-based protections, the new law elevates the safeguarding of private enterprises' rights to a statutory level, said Li Hongjuan, deputy director of the Private Economy Office at the Economic System and Management Research Institute of the NDRC.This represents a crucial milestone in the development of China's private economy, whether viewed from a historical perspective or considered at the current critical juncture of China's development, Li told China Media Group (CMG).Industry insiders have noted that private enterprises continue to face significant challenges.
Issues such as discriminatory enforcement, limited market access, and financing barriers have previously contributed to a slowdown in private investment.The new law has offered robust solutions to address the most pressing challenges facing private enterprises, demonstrating China's unwavering commitment to supporting the private sector's development, said Li.For instance, the law explicitly prohibits the abuse of administrative or criminal measures to interfere in economic disputes, and standardize cross-jurisdictional law enforcement, she noted, adding that these represent a strengthened legal framework with binding constraints that directly respond to the private sector's most urgent demands.'Right on time'Private enterprises have long served as a key driving force behind China's economic rise, with their impact clearly reflected in key national indicators. Officially registered private enterprises in China have surpassed 57 million, accounting for 92.3 percent of all Chinese businesses.
The sector contributes more than 50 percent of national tax revenue, more than 60 percent of China's GDP, over 70 percent of technological innovations, and more than 80 percent of urban employment opportunities.Wang Xiaoye, a researcher at the Chinese Academy of Social Sciences, emphasized the private sector's triple role in China's economic strategy.Private enterprise development is essential for maintaining employment stability, stimulating consumer demand, and creating an integrated domestic market all critical factors for China's economic resilience, Wang told Caixin, a financial magazine.With the global landscape undergoing significant transformation and tariff wars looming over the world economy, she noted domestic demand has become increasingly important for China's growth.In this context, the private sector promotion law, which institutionalizes support for precisely those private enterprises that will power China's domestic demand engine, comes right on time, according to Wang.One of the attendees of the February symposium on private enterprises, Qi Xiangdong, chairman of cybersecurity firm Qi-Anxin, shared the same belief."The private economy promotion law is truly timely it gives everyone a major boost of confidence and reinvigorates our drive to push forward," Qi told CMG.