China has passed its first national law dedicated to protecting and promoting the private sector, marking a historic milestone that boosts confidence among businesses and experts alike. The new law provides a powerful legal guarantee for the development of private enterprises, which are key drivers of employment, consumption, and innovation in the country.
Amid global economic upheaval and trade tensions, the Private Sector Promotion Law comes at a critical time to empower China’s private businesses. Passed on Wednesday by the Standing Committee of the National People’s Congress, it’s set to take effect on May 20, 2025.
The law emphasizes the importance of the sustainable, healthy, and high-quality development of the private economy as a significant and long-term policy of China. It covers 78 articles that ensure fair market access, financing support, enhanced services, and protection of innovation for private enterprises.
A Milestone for Businesses
China’s private sector has thrived under the reform and opening-up policies over the past decades. This new law elevates the safeguarding of private enterprises’ rights to a statutory level, providing stronger protection than previous policy-based measures.
“This represents a crucial milestone in the development of China’s private economy,” said Li Hongjuan, deputy director of the Private Economy Office at the Economic System and Management Research Institute of the National Development and Reform Commission. “The law offers robust solutions to address the most pressing challenges facing private enterprises.”
The law explicitly prohibits the abuse of administrative or criminal measures to interfere in economic disputes and standardizes cross-jurisdictional law enforcement. These steps aim to create a fair and just business environment for private companies.
Boosting Confidence and Growth
Private enterprises are a key driving force behind China’s economic rise. With over 57 million officially registered private enterprises, they account for 92.3% of all Chinese businesses. The sector contributes more than 50% of national tax revenue, over 60% of GDP, more than 70% of technological innovations, and over 80% of urban employment opportunities.
Wang Xiaoye, a researcher at the Chinese Academy of Social Sciences, highlighted the private sector’s triple role in maintaining employment stability, stimulating consumer demand, and creating an integrated domestic market. “The new law institutionalizes support for private enterprises that will power China’s domestic demand engine,” Wang noted. “It’s right on time.”
Qi Xiangdong, chairman of cybersecurity firm Qi-Anxin, shared this enthusiasm. “The Private Economy Promotion Law is truly timely—it gives everyone a major boost of confidence and reinvigorates our drive to push forward,” he said.
As China navigates a transforming global landscape, this landmark law signals unwavering commitment to bolstering the private sector, ensuring that businesses are empowered to contribute to economic resilience and growth.
