China has taken a significant step to empower its private sector with the enactment of the Private Economy Promotion Law, which came into effect on Tuesday. This landmark legislation is designed to bolster private businesses by ensuring equality and fair competition, addressing the long-standing concerns of entrepreneurs across the nation.
The new law emphasizes creating a level playing field for all market entities. It mandates equal legal status and development rights, prohibiting unfair treatment in market access, public procurement, and financing. This move aims to dismantle systemic barriers that have previously limited private firms’ access to markets, resources, and opportunities.
According to data from the State Administration for Market Regulation, as of March 2023, privately owned enterprises in China numbered over 57 million, making up 92.3 percent of all registered businesses. Despite their dominance in numbers, these enterprises have faced challenges in sectors like energy, finance, and infrastructure. The new legislation seeks to change that by codifying principles that support their growth.
Li Xin, deputy head of an enterprise research institute at Shandong University of Finance and Economics, emphasized the strategic importance of this law. “With the global economy facing complex conditions, there’s an urgent need to stabilize expectations. Using legal measures to regulate government actions aligns with international rules and gives private enterprises compliant frameworks for competition,” Li said.
The law also formalizes the negative list mechanism, allowing private investment in all sectors not explicitly restricted. Provinces like Zhejiang are already revising local regulations to comply, launching high-quality projects in energy and transportation to attract private investment.
Liu Yonghao, chairman of New Hope Group, praised the changes. “The legal backing gives us reassurance to expand investments, especially in emerging industries,” he said, highlighting the potential for more liberated participation of private capital.
Innovation is a key focus of the legislation. Private enterprises contribute 70 percent of China’s patented innovations and 90 percent of high-tech enterprises. The law encourages investment in advanced manufacturing, artificial intelligence, and green energy—sectors critical to cultivating new productive forces.
Qi Xiangdong, chairman of cybersecurity company Qi-Anxin Technology Group, noted that the law’s guarantees on intellectual property protection would help tech firms compete globally without hesitation.
The legislation reflects a forward-thinking approach by introducing provisions for cutting-edge technologies and innovative business models. Liu Chunsheng, an associate professor at Central University of Finance and Economics, remarked that this balance between regulation and innovation allows new ventures to experiment and grow.
As private businesses contribute over 60 percent of China’s GDP and 80 percent of urban employment, the law’s implementation is a significant step toward integrating them into the country’s economic modernization blueprint. Nan Cunhui, chairman of Zhengtai Group, stated, “This legislation fundamentally alleviates the identity anxiety facing the private economy, demonstrating the country’s high regard and unwavering support.”
