New law to protect China's private enterprise can spur greater growth
China's private enterprises have long been the key engines for growth, job creation and technological innovation. Still, it is a wonder they thrived at all in an environment of regulatory murkiness.
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The lack of clarity has left them with a reputation as a neglected stepchild when compared to favoured state-owned enterprises, and exposed them as easy targets of fines and fees by local governments keen to replenish their dwindling coffers.
At long last, China's parliament has provided some welcome legal clarity.
The Private Economy Promotion Law, crafted to provide legal protection and promotion of the non-state sector was passed yesterday by the National People's Congress Standing Committee and is due to take effect on May 20.
The law was to have been a highlight of the March meetings of parliament and its top advisory body, but was delayed. This was due not to cold feet, but because Beijing recognised the need to reassure the private sector it was providing genuine measures to address their concerns rather than lip service.
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The law now promises to promote fair market competition, encourage private sector involvement in science and technology development, and protect their economic rights and interests.
Its passage confirmed the Communist Party's long-term support for the development of the private sector, and its core role in national rejuvenation efforts. It already produces more than 60 per cent of GDP, 70 per cent of hi-tech innovation and 80 per cent of urban jobs.
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