China's private firms given legal recourse with new law
With the passage of a law designed to bolster China's private economy, Beijing's frequent shows of rhetorical support for businesses face a litmus test as the legislation is set to come into force on May 20.
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Observers and entrepreneurs are closely following the implementation of the
Private Economy Promotion Law to determine whether the measure has teeth. Of particular interest is how the law will impact the ability of firms to take local-level governments to court, and how it will protect the private sector from fines that have long been considered arbitrary and profit-driven.
'The new law has clear-cut provisions on curbing administrative powers,' said Rui Meng, an economics professor at the China Europe International Business School in Shanghai. 'Thus, entrepreneurs can make better use of it in litigations, especially in legal cases against a local government.
'It's also hoped that courts will be more willing to accept such cases and adjudicate them more fairly.'
The 78-article law,
passed on Wednesday by China's top legislature, is the first explicitly created for this purpose. And it has been hailed by state media as evidence that Beijing is walking the walk after oft-repeated pledges to revitalise the non-state economy.
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The law forbids the use of administrative measures to intervene in economic disputes, as well as unscrupulous, profit-driven fine collections and asset seizures.
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RTHK
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Private economy law 'to bring new growth momentum'
Private economy law 'to bring new growth momentum' Vice Minister of Justice Wang Zhenjiang says the law clearly sets out the legal status of the private economy in the country. Photo: RTHK National Development and Reform Commission deputy head Zheng Bei says officials will ensure private firms enjoy equal market access as state-owned enterprises. Photo: RTHK Chinese legislative and economic authorities pledged on Thursday to firmly implement the newly passed private economy promotion law to safeguard the rights of enterprises, saying it will unleash new growth momentum. The 78-article bill, which was passed last week and is set to take effect on May 20, includes measures to combat choke points hindering the private sector, such as ensuring equal market access, finance support and legal protection. Vice Minister of Justice Wang Zhenjiang said in Beijing the law clearly defines the legal status of private economy in the country. He also vowed to resolutely implement "targeted measures" listed in the bill, such as ramping up enforcement to combat arbitrary fines and fees. "The Private Economy Promotion Law clearly stipulates that a sound complaint and reporting mechanism for violations should be established," Wang said. "The ministry of justice will use the introduction and implementation of the law as an opportunity to urge all regions and departments to intensify investigations and punishment of any violations, strengthen investigations and rectification of problems and ensure that rectification takes place. "At the same time, key regions, areas and issues should be selected for spot checks," he said. For his part, Zheng Bei, the deputy head of the National Development and Reform Commission, said the country's economic planner would boost efforts to ensure that private companies enjoy equal market access as state-owned enterprises – as stipulated in the law. Noting that the rate of the winning tender bids that were lodged by private firms had increased by five percentage points between January and April, compared to the same period last year, she said authorities encourage private firms to join more of the large-scale national projects that are set to be launched this year, with the worth of the projects amounting to three trillion yuan. "If private enterprises encounter barriers to entry, they can log in to our commission's website and report it via the relevant channel, and we'll work with the relevant parties to investigate and verify the issue," she said. "We [also] support private enterprises that wish to actively participate in national strategic mega projects and the 'two new' programmes involving industrial upgrades and consumer trade-ins," she added. Echoing Zheng, Wang Ruihe, deputy director of the National People's Congress Standing Committee's Legislative Affairs Commission, China's highest legislative body, pointed to more than 26 references to "equal treatment and fair access" in the law. Also attending the event were officials from National Financial Regulatory Administration (NFRA) and the All-China Federation of Industry and Commerce. The NFRA stressed that authorities have been rolling out credit and loan support for small and micro private entities, such as offering discounts and relaxing the tolerances for non-performing loan ratios.
South China Morning Post
03-05-2025
- South China Morning Post
China's private firms given legal recourse with new law
With the passage of a law designed to bolster China's private economy, Beijing's frequent shows of rhetorical support for businesses face a litmus test as the legislation is set to come into force on May 20. Advertisement Observers and entrepreneurs are closely following the implementation of the Private Economy Promotion Law to determine whether the measure has teeth. Of particular interest is how the law will impact the ability of firms to take local-level governments to court, and how it will protect the private sector from fines that have long been considered arbitrary and profit-driven. 'The new law has clear-cut provisions on curbing administrative powers,' said Rui Meng, an economics professor at the China Europe International Business School in Shanghai. 'Thus, entrepreneurs can make better use of it in litigations, especially in legal cases against a local government. 'It's also hoped that courts will be more willing to accept such cases and adjudicate them more fairly.' The 78-article law, passed on Wednesday by China's top legislature, is the first explicitly created for this purpose. And it has been hailed by state media as evidence that Beijing is walking the walk after oft-repeated pledges to revitalise the non-state economy. Advertisement The law forbids the use of administrative measures to intervene in economic disputes, as well as unscrupulous, profit-driven fine collections and asset seizures.
South China Morning Post
01-05-2025
- South China Morning Post
China's new private sector law takes aim at ‘profit-driven' enforcement
China's newly passed private sector law bans 'profit-driven' enforcement that unfairly targets the non-state sector, according to the full text of the legislation, underscoring Beijing's determination to rein in local authorities and allay private entrepreneurs' concerns as the country faces increasing economic pressure at home and abroad. Advertisement Compared with the initial draft released last year, the final version of the 78-article Private Economy Promotion Law adds more weight to addressing long-standing complaints about cross-regional enforcement and includes specially added clauses to reinforce accountability for officials directly responsible for failures to comply with the law. Analysts said the key focuses of the new law are the regulation of administrative acts and the limitation of administrative powers, adding that clauses outlining a clear accountability mechanism helped give the new law 'teeth'. Tang Dajie, a senior researcher with the China Enterprise Institute think tank in Beijing, said: 'The new law dedicated to the private sector may help businesses better defend their interests, including taking local government to court if they think their rights have been encroached upon.' A post on the Ministry of Justice's WeChat account hailed the enactment of the law at a critical moment as having far-reaching historical significance. Advertisement 'External risks and challenges are becoming increasingly complex,' the state-owned Legal Daily said in an opinion piece posted on the ministry's account on Thursday.
