China publishes a draft law on private sector promotion

China's Ministry of Justice and the National Development and Reform Commission (NDRC) on Thursday published a draft law on private sector promotion to solicit public opinion. The law is formulated in a bid to optimize the development environment for the private economy, ensure fair market competition for various types of economic entities and promote the sound development of private businesses and entrepreneurs, according to the draft.

The draft law, once adopted, will be China's first basic law devoted to the development of the private economy, and its main contents include ensuring fair competition, improving the investment and financing environment, supporting technological innovation, and enhancing protection of rights and interests of the private economy. The draft law is open for public comment through November 8, 2024, according to a notice published on the NDRC's website. 

In total, the draft law contains 77 articles that cover various aspects related to the development of the private economy. It reaffirms that the private economy is an important part of the socialist market economy, a new vital force in promoting Chinese modernization, a critical foundation for high-quality development and a major force in supporting the country to become a great modern socialist country and realize the great rejuvenation of the Chinese nation.  

The country adheres to the principles of equal treatment, fair competition, equal protection and common development in order to promote the development and growth of the private economy, and private economic entities enjoy equal legal status, market opportunities and development rights with other types of economic entities, the draft law states. 

Qi Xiangdong, a member of the 14th National Committee of the Chinese People's Political Consultative Conference and chairman of Qi An Xin Technology Group, told the Global Times on Thursday that the draft law not only demonstrated the Communist Party of China (CPC) and the country's firm determination to support the sound development of the private economy and the healthy growth of personnel in the private sector, but also boosted confidence among private entrepreneurs to focus on business. 

"This is an important milestone in promoting the development and growth of the private economy," Qi said. 

To ensure fair competition, among various stipulations, the country has implemented a nationwide unified negative list system for market access, and all types of economic entities, including private ones, can equally enter areas outside the negative list for market access. The country will also ensure private entities can equally access resources such as capital, technologies, human resources, data and land that are applicable under national development support policies, the draft law states.  

In addition to ensure fair competition, the draft law also contained a slew of support for the private economy, including supporting private entities to participate in major national strategy and major projects and invest and operate in strategic emerging industries, future industries and other fields. The country will also improve the multi-level capital market system and support qualified private economic entities to obtain direct financing on an equal basis through the issuance of stocks, bonds and other channels, the draft law states.

In terms of supporting technological innovation in the private sector, the country, among other measures, will encourage and support private economic entities to play an active role in developing new quality productive forces, and support them to participate in national technological breakthrough projects. And the country will strengthen the protection of original innovations by private economic entities, according to the draft law.  

The draft law underscores the great importance attached to the sound development of the private economy, and will offer great encouragement for the private economy to pursue high-quality development, economists said.

Firm reassurance

Cao Heping, an economist from Peking University, said the draft law offers great reassurance for the private economy and private entrepreneurs, as it has demonstrated the great importance attached by the country to the sound development of the private economy. "The draft law is very detailed in its content covering all aspects of the development of the private economy, which is very helpful," Cao told the Global Times on Thursday.

A meeting of the Political Bureau of the CPC Central Committee on September 26, which analyzed and discussed the current economic situation and made plans for future economic work, stressed that it is essential to formulate a private sector promotion law to foster a favorable environment for the development of the non-public sector.

Minister of Justice He Rong said in February that the country had started drafting a law on promoting its private economy. The minister said that the drafting work would widely solicit opinions from the public and reach a consensus among different parties so that the law can effectively promote the healthy development of the private sector.

Qi said that the drafting process adopted an open-door approach, soliciting the opinions and suggestions of private enterprises many times, as it sought to build consensus among all parties and responds to the concerns of the enterprises.

"This is a very important piece of legislation," Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Thursday. "The content as well as the spirit of the draft law will greatly help boost confidence of private businesses."

By extending legal guarantee to the private economy, the draft law clearly shows the great importance attached to and support for the private economy, Xi Junyang said, noting that once the draft law is adopted, it will offer private businesses clear legal guidance and procedures for their operations.