Latest news with #PrivateEconomyPromotionLaw
Malaysian Reserve
11-07-2025
- Business
- Malaysian Reserve
Upgrade China to ‘Attractive' amid private sector resurgence
Targeted support measures for businesses suggest renewed recognition among leaders that the sector is not a threat to control by iFAST RESEARCH TEAM OVER the past few years, China's economic trajectory has increasingly drawn negative sentiment. One of the most significant concerns has been the country's pivot toward a more centralised, top-down economic model. This shift has been characterised by a series of regulatory crackdowns across various sectors, most notably within the technology industry. Leading private enterprises, once seen as flag bearers of China's economic dynamism, were subjected to stringent oversight, resulting in a chilling effect on innovation and investment. These actions led to prolonged periods of depressed valuations for some of China's most prominent technology firms. While many of these challenges remain unresolved and will take significant time to unwind, the past six months have brought encouraging signs of policy recalibration. Targeted support measures for private businesses suggest a renewed recognition among Chinese leaders that the private sector is not a threat to control, but a necessary engine for sustainable growth. A Turning Point In February, a symbolic policy shift took place as President Xi Jinping convened a high-profile symposium with top tech entrepreneurs, including the long-absent Jack Ma. His reappearance — after years on the sidelines — sent a clear signal of political recalibration. Xi's message, encouraging entrepreneurs to contribute to national innovation, signals a strategic recognition that private enterprise is essential to advancing China's tech ambitions. The move also serves as a measure aimed at rebuilding trust with the business community and investors. This rhetorical shift was quickly followed by tangible policy action. During the annual 'Two Sessions' in March, policymakers unveiled a series of measures aimed at institutionalising support for the private sector. These included commitments to expand financial access for private firms, enable their participation in major infrastructure projects, and foster involvement in advanced manufacturing and the digital economy through a new public-private partnership (PPP) framework. These moves are intended to diversify capital channels and re-anchor private enterprise within the national development agenda. A further milestone came with the implementation of the Private Economy Promotion Law on May 20, 2025, the first law explicitly dedicated to supporting private businesses. The legislation aims to ensure fair competition, equal access to market resources and legal protections for private enterprises. Its passage marks a significant shift, signalling that private sector growth is now supported by a robust legal framework. These developments collectively suggest a strategic rebalancing of China's economic model. Looking ahead, we believe that China's economic growth will become increasingly diversified, driven by both the scale and stability of state-owned enterprises and the agility and innovation of the private sector, laying the groundwork for a more resilient and competitive Chinese economy. Key to Economic Growth According to All-China Federation of Industry and Commerce vice chairman Qiu Xiao-ping, the private sector is a cornerstone of China's economy — contributing over 50% of tax revenue, 60% of GDP and more than 80% of urban employment. Its vitality is essential to tackling core challenges. China's bleak labour market has been a focal point of criticism in recent years. The downturn began in 2022, when regulatory crackdowns on the technology and education sectors led to widespread layoffs. This abrupt policy shift not only disrupted employment but also severely eroded investor confidence, triggering an equity market slump. By mid-2023, youth unemployment had soared to over 23%. The resulting labour market fragility weighed heavily on household sentiment and dampened consumption demand. Recent signs, however, point to a gradual reversal. With the government now signalling stronger support for high-tech sectors, job creation is beginning to show green shoots. A notable example is Tencent Holdings Ltd's announcement of its largest internship recruitment programme, which plans to onboard 28,000 interns over the next three years, with a strong focus on full-time conversion. As leading technology firms expand, they are likely to absorb a significant portion of China's educated youth, who will be a key demographic for long-term productivity. A more stable labour market is fundamental to China's strategic shift toward consumption-driven growth. In 2025, retail sales have shown encouraging resilience, with year-on-year (YoY) growth surpassing 5% since March. While short-term stimulus measures, such as consumption vouchers, have contributed to the rebound, their impact is inherently limited, as seen in the fading effects of similar efforts in 2024. As such, a healthier labour market, anchored by private sector expansion, would provide the structural support needed to maintain momentum, especially in the face of external trade headwinds. Consumption and AI Momentum As China's policy direction increasingly leans toward stimulating consumption and accelerating artificial intelligence (AI) adoption, the positive impact is becoming visible in corporate earnings. The MSCI China Index has shown a notable rebound, with the first quarter of 2025 (1Q25) earnings growth gaining strong momentum. Information technology led the pack with nearly 40% YoY earnings growth, followed by communications services at 21%, while consumer staples and consumer discretionary also posted robust double-digit gains. China's emerging AI wave is at the heart of this rebound. In 1Q25, companies deeply integrated into the digital economy and AI development saw substantial revenue uplifts. Alibaba Group Holding Ltd, Tencent and Inc all reported double-digit growth in marketing revenues, powered by AI-driven advertisement targeting tools that improved customer segmentation and conversion efficiency. Meanwhile, cloud revenue surged by 18% for Alibaba and 42% for Baidu Inc, as AI workloads drove greater demand for scalable infrastructure. While AI software innovation in China is accelerating, hardware remains a strategic bottleneck. US export controls have effectively blocked access to cutting-edge AI chips, such as Nvidia Corp's A100 and H100, creating a critical gap in China's AI development stack. In response, Chinese tech leaders are intensifying efforts in domestic chip design. Huawei Technologies Co Ltd's Ascend series, though still behind Nvidia's chips in raw computing power, are capable of supporting inference tasks for models like DeepSeek's R1, underscoring progress in localised solutions. Notable strides are also being made in consumer-grade chips. Huawei's Kirin 9000 and Xiaomi's recently launched XRing O1, the first Chinese-designed smartphone system-on-chip built on a three-nanometres (nm) process, represent significant advancements. While these chips have yet to match the performance of Western-designed counterparts in AI training, they function as important commercial enablers. China's drive for domestic chip production has also spurred growth for its leading foundries, notably Semiconductor Manufacturing International Corp (SMIC) and Hua Hong Semiconductor Ltd. However, Chinese foundries lack access to ASML Holding's cutting-edge extreme ultraviolet light (EUV) lithography tools, limiting them to 7nm processes using older deep ultraviolet (DUV) technology — with yield rates reportedly still below 50%. This creates a cost-efficiency trade-off: While chip demand is climbing, foundries face heavy capital expenditures for research and development (R&D) and equipment upgrades, putting pressure on short-term profitability. Despite these headwinds, the broader push underscores China's long-term commitment to semiconductor self-reliance. Foundry investments are increasingly viewed not just as commercial endeavours but as strategic imperatives. Even at the expense of near-term margins, sustained policy support suggests these efforts will remain a national priority amid rising geopolitical and technological competition. Upgrading Valuation The recent structural reforms supporting China's private sector represent a pivotal shift in the country's economic trajectory. By creating a more favourable environment for private enterprises, these changes are expected to boost earnings growth, innovation capacity and productivity, especially in the technology sector, which sits at the nexus of AI advancement and rising domestic consumption. The views expressed are of the research team and do not necessarily reflect the stand of the newspaper's owners and editorial board. This article first appeared in The Malaysian Reserve weekly print edition
South China Morning Post
25-06-2025
- Business
- South China Morning Post
China to private enterprises: invest in cross-border infrastructure like AIIB is doing
China will significantly encourage private enterprises to participate in infrastructure projects, including cross-border connectivity initiatives championed by the Asia Infrastructure Investment Bank (AIIB), Minister of Finance Lan Foan said at the lender's annual meeting. As the global economy slows and international development aid declines, developing countries are increasingly constrained by limited public resources for connectivity investments, Lan said at the meeting in Beijing on Wednesday. 'Mobilising the potential of private capital for cross-border infrastructure, and building sustainable financing mechanisms, have become pressing priorities,' he noted. China's Private Economy Promotion Law went into effect last month, encouraging private enterprises to invest in infrastructure, Lan said, noting that the country would continue to improve its systems and environment to welcome more private sector participation in cross-border connectivity projects. To ensure that the private sector remains confident and willing to invest, Lan also called for efforts to reduce lingering concerns about risks related to geopolitics and defaults, and to improve ratings and expected returns of infrastructure projects through coordination with other regional development institutions. And the further mobilisation of private capital could help overcome the bottleneck of insufficient public investment for infrastructure development, he said.
The Star
12-05-2025
- Business
- The Star
China touts new law as foundation for private sector growth
China will use a recently passed law supporting its private economy as a springboard for growth, officials said, with the non-state sector becoming all the more crucial as the country looks inward for economic momentum amid an unprecedented trade war with the United States. 'There is an urgent need to improve relevant institutional measures in response to prominent problems encountered [by the private enterprises] in practice,' said Wang Zhenjiang, China's vice-minister of justice, at a press conference for the new law on Thursday. Wang added that private enterprises still face difficulties in areas such as fair market competition, equal market access, financial support and legal protections. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. The law has clearly defined the legal status of the private economy and the government's support for it for the first time, Wang said, adding the legislation is 'expected to further unleash the internal momentum and creative vitality of the private sector.' Officials from the Legislative Affairs Commission of the National People's Congress Standing Committee – China's highest legislative body – attended the briefing with representatives from the National Development and Reform Commission (NDRC), the country's top economic planner. Also present were figures from the National Financial Regulatory Administration (NFRA) and the All-China Federation of Industry and Commerce. The news conference came a week after the passage of the country's much-anticipated Private Economy Promotion Law, which among its clauses regulates administrative powers to protect the non-state sector. The 78-article law is set to enter into force on May 20. More detail does not necessarily mean better ... things evolve quickly, and overly specific rules can sometimes hinder development The world's second-largest economy is turning to its private sector to help meet its annual target of 'around 5 per cent' for gross domestic product growth, as exports are pared back amid a fierce tariff war with the US and other external headwinds. 'We will work to fully implement the law and strengthen its mandatory enforcement,' said Zheng Bei, deputy head of the NDRC. The government would assist private firms, Zheng added, in areas such as market access, delayed payments, rights protection, hardship aid and improving communication between state entities and businesses. She also pledged to expand private sector participation in major national projects, saying the NDRC will launch initiatives worth around 3 trillion yuan (US$415.31 billion) this year in transport, energy, water conservancy and other infrastructure. While the enactment of the law was hailed by state media as evidence Beijing is following through on oft-repeated pledges to revitalise the private economy, entrepreneurs and analysts are watching its implementation closely to see whether it will have real bite – particularly if it will empower firms to take local governments to court and curb fines viewed by many businesspeople as arbitrary and profit-driven. Wang of the Ministry of Justice said several provisions in the law are highly targeted, citing those regulating administrative law enforcement as one example. While concise, he said, they are of 'significant' value. 'As a fundamental law, more detail does not necessarily mean better. In reality, things evolve quickly, and overly specific rules can sometimes hinder development,' he said. 'The law focuses on addressing major issues that require immediate legislative action by clarifying key institutional measures ... while also leaving room for future development over the next decade.' He added that his ministry will implement the law by tightening oversight of, quickly setting up a complementary legal framework and establishing a channel for logging complaints and reports of misconduct in administrative enforcement. Cong Lin, deputy head of the NFRA, said the agency would guide financial institutions to step up support for private enterprises by encouraging banks to show greater tolerance for non-performing loans from small and micro-sized firms, and by introducing a liability exemption mechanism for frontline credit officers to ease their reluctance to lend. Regarding the tech sector – where private enterprises have stood out in recent years – Cong said the NFRA has been working to improve its model for finance, piloting equity investment to support tech-driven, innovative firms. The private sector contributed to half of China's total tax revenue, 60 per cent of gross domestic product and 80 per cent of urban employment in 2023, according to the National Bureau of Statistics. But a prolonged slump in the property sector, sluggish consumer spending and lingering regulatory uncertainty have weighed on investor confidence for years. In February, at a high-profile symposium with some of the country's most prominent entrepreneurs – the first of its kind since 2018 – President Xi Jinping reaffirmed the essential role of the private sector in the country's economy. More from South China Morning Post: For the latest news from the South China Morning Post download our mobile app. Copyright 2025.
RTHK
08-05-2025
- Business
- RTHK
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.
The Star
04-05-2025
- Business
- The Star
China passes private sector law, addressing gripes of beleaguered businesses
China passed a much-anticipated law to shore up the country's private economy on Wednesday, as Beijing delivers on its oft-repeated promise to protect and promote the non-state sector at a time when the Chinese economy looks to hinge more on domestic dynamism to ensure growth amid a trade war with the United States. The 78-article Private Economy Promotion Law was passed following its third reading by the Standing Committee of the National People's Congress, China's top legislature. It will come into force on May 20. As China's first law focused on promoting the private sector, it stipulates measures to promote fair market competition, encourage the involvement of private firms in scientific and technological projects, and safeguard their economic rights and interests, according to state media reports. The full text of the legislation has yet to be published. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. Li Zhaoqian, president of the China Society for the Study of the Private-Sector Economy, wrote in an article published in Communist Party newspaper the People's Daily on Wednesday that the law's success would depend on it being thoroughly implemented. 'There are still difficult issues and choke points such as market access, unpaid debts owed to private enterprises, financing barriers, as well as protecting the rights of entrepreneurs,' Li said. 'To tackle these, we need more vigorous coordination to strengthen implementation supervision [of the law].' Tang Dajie, a senior researcher with the China Enterprise Institute think tank in Beijing, said a key provision in the law was a measure aimed at preventing local authorities from unfairly targeting private businesses – so-called 'profit-driven' law enforcement. 'In the past two years, the business community has responded strongly to profit-seeking law enforcement and officers going beyond their jurisdiction to collect fines or seize assets,' Tang said. 'The law will restrict the law enforcement power of the public security department and promote strict, standardized, fair and civilized law enforcement.' China's leaders hope the new law will be a morale booster. There had been expectations that the law would be deliberated over – and possibly passed – during last month's annual legislative session, but it was not. The passage of the law appeared to have been accelerated since the latest meeting of the Standing Committee of the National People's Congress began on Sunday, with legislators voting after the third reading, Tang noted. The move comes at a crucial moment for China, as government efforts to boost domestic demand and investment gain increasing urgency with the Chinese economy beginning to feel the impact of sky-high US tariffs. The drafting and crafting of a law dedicated to the private sector began in 2024, led by the top economic planning agency, the National Development and Reform Commission. A draft was released for public feedback in October. And the law's second review in February sparked wider discussions on market entry and enforcement issues. That month, President Xi Jinping raised expectations when he assembled the country's most prominent private entrepreneurs to rally the sector and seek its help in stabilising the economy. It was the first such meeting held since 2018. China's private sector is responsible for more than 60 per cent of the nation's gross domestic product, 70 per cent of its technological innovation, and 80 per cent of urban jobs, according to the National Bureau of Statistics. But China's unbalanced economic recovery, sluggish consumption, and regulatory uncertainties have sapped investor sentiment for years. The private sector's long-standing complaints, including the curtailment of market access and perceived favouritism towards the state sector, have yet to be fully addressed. Private investment has contracted for years. But in an encouraging sign, the sector's new investment edged up 0.4 per cent, year on year, in the first quarter. More from South China Morning Post: For the latest news from the South China Morning Post download our mobile app. Copyright 2025.
