context: Since early 2024, the PRC has signalled its intent to quickly draft a Private Economy Promotion Law to strengthen confidence in the private sector. The issue was raised during the Two Sessions and included in the 2024 NPCSC legislative work plan. The Third Plenum in July further underscored the law's importance for fostering greater opportunities in non-public economic development.
The Party’s Third Plenum proposed a list of concrete measures directed at supporting private economic development, reports China News.
During a Private Economy Promotion Legislative Forum earlier this year, the MoJ (Ministry of Justice), NDRC (National Development and Reform Commission) and the NPCSC (National People’s Congress) Legislative Affairs Commission announced that
- legislative work has begun for the Private Economy Promotion Law
- the legislation process will be accelerated
The Third Plenum Resolution further emphasised the law, claiming that the state will
- improve the business environment from a legal dimension
- guarantee that private enterprises can fairly participate in market competition
- advance the healthy development of the private economy
Li Jin 李锦 China Enterprise Research Institute chief researcher points out that
- the private economy has played a major role in
- stabilising growth
- advancing innovation
- supporting employment
- improving social conditions
- ‘invisible boundaries’ targeting private enterprises exist in certain sectors
- limit their room for participation
- a proper legislation can
- guarantee fair treatment in market access, competition and legal protection via the legal system
- provide more stable expectations for development
Liu Junhai 刘俊海 Renmin University Law School professor argues the law will vitalise private operations.
While central and local governments have rolled out relative police measures to stabilise private confidence, there is no relevant central law. Central and local policies wear off quickly, and frequent use of such measures will weaken their incentives. As such, there is a need for a law dealing with the issue.
The decision also mentioned the permittance for private enterprises to shoulder national key technological breakthroughs and open national research infrastructure to private entities.
Li Wei 李伟 Cheung Kong Graduate School of Business vice president and economics professor explains that such directives
- open further room for private enterprise development and investment
- beneficial for the country
- encourage fair market competition
- advance effective allocation of resources
- allow enterprises to upgrade developmental effectiveness
- advance new productive forces