Latest news with #PrivateEconomyPromotionLaw
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.
South China Morning Post
03-05-2025
- Business
- 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.
CNA
01-05-2025
- Business
- CNA
China's tariff-hit exporters turn inward, but overcapacity remains key challenge
SINGAPORE: It was once hailed as China's answer to Apple's Beats Electronics - offering sleek yet affordable high-quality audio devices that appealed to a growing young, tech-savvy global customer base. But even after global sales of up to 300 million units, Chinese electronics audio company 1MORE is now shifting gears - redirecting more of its sales to the domestic Chinese market as US-China tensions continue to escalate amid a bitter tariff tiff. It has teamed up with one of China's largest e-commerce platforms to market and promote its products - a move which analysts have noted is part of a wider trend that comes at a time when consumer confidence continues to hover near historic lows and government efforts to boost domestic spending have not been widely successful. But 1MORE remains confident about its strategy. 'Joining has not only helped 1MORE leverage the platform's reach to boost sales and brand awareness, it has also showcased the quality and technological strength of (our) products,' said Cai Yunhui, the group's chief operating officer, adding that sales on the platform had grown by nearly 20 per cent in the past two weeks. 'Since 1MORE products have always maintained the same standards for both domestic and overseas markets, no changes were needed for products shifting to domestic sales.' SUPPORTING TARIFF-HIT BUSINESSES The US-China trade conflict has reignited with renewed intensity, plunging the two superpowers into a new phase of global economic uncertainty. Since his return to the White House in January, US President Donald Trump has imposed additional tariffs as high as 145 per cent on Chinese imports - prompting Beijing to hit back with tariffs of up to 125 per cent on US goods. Official trade talks have yet to take place but China has granted tariff exemptions on select products, reportedly listing US-made products that would be exempted - an approach observers said would allow Beijing to maintain its public messaging while privately taking practical steps to provide concessions. Beijing has urged exporters to pivot to its massive domestic market, by announcing plans and incentives to help tariff-hit firms and businesses mitigate risks. Due to take effect on May 20, the recently-passed Private Economy Promotion Law is said to include provisions on fair competition, access to investment and financing and rights protections. On the ground, Chinese tech and retail giants have also been stepping up efforts to support exporters squeezed by US tariffs. As part of a 200 billion yuan (US$27.6 billion) initiative announced on Apr 11, pledged to help exporters sell their products domestically over the next year. Employees will be sent to Chinese companies involved in foreign trade, directly purchase their 'high-quality products' and set up dedicated sections on its e-commerce platform to sell these products and direct traffic and marketing support. The company is also hoping for more support in other overseas markets if US-China trade tensions continue to persist, Cai said. 'We also hope to see more domestic exhibition subsidies and government procurement projects extended to support private enterprises,' she added. Rival Alibaba also announced special support programmes through its popular online retail sites Taobao and Tmall, as well as high-tech supermarket chain Freshippo, which rolled out a fast-track onboarding process, providing 24/7 support and simplified approvals for tariff-hit exporters. A new 'Export-to-Domestic' section in its apps will boost visibility for Chinese-made goods. PDD Holdings, which operates the popular Pinduoduo Chinese shopping app, has also pledged to invest 100 billion yuan over the next three years to support smaller exporters, including subsidies for small- and medium-size enterprises (SMEs) in cross-border e-commerce operations to help stabilise production and navigate overseas challenges. Chinese supermarket giant Yonghui Superstores, which operates over 926 stores across 28 provinces selling agricultural products, processed foods and household appliances, has called on affected manufacturers to join its 'green channel initiative' aimed at supporting domestic supply chain enterprises grappling with stockpiles caused by export challenges. Speaking to Chinese state media outlets, the company said it was also currently in talks with over 70 Chinese supply chain enterprises, including those supplying products to US competitors, like Costco and Walmart. In a state media interview published on Apr 14, Cao Derong, President of the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-products (CFNA), said greater attention and support from authorities would be needed to ensure a smooth transition for Chinese export companies hoping to successfully pivot to the domestic market. 'This requires the relevant domestic departments to pay greater attention and provide further support, so that the transition can be smooth,' Cao said. CHALLENGES OF 'PIVOTING INWARDS' Even with incentives and extensive support, analysts have continued to express doubt over China's massive domestic market being able to ease the burden faced by exporters. One, pre-existing issues like still-struggling growth and consumption rates and increasing spending power would take time to resolve, analysts told CNA. 'Without higher income levels, these remain just (empty) slogans,' said Liu Zhibiao, professor and director of the Yangtze Industrial Economic at Nanjing University. 'To solve this, we need to raise the share of national income allocated to households, improve disposable income and strengthen the social safety net - only then can a domestic-demand-led growth strategy become a reality.' Persistent overcapacity also remains a key economic barrier for businesses trying to shift exports inward, said Liu. 'Many factories are already running well below capacity. If supply keeps outpacing demand, it's hard for the domestic market to absorb more,' he said, adding that many overseas export-reliant Chinese firms still lacked the experience of being able to operate domestically. 'Their sales channels, marketing methods and payment systems were built for overseas markets and won't easily translate at home.' He also noted that many goods intended for US markets would not likely translate or appeal to China's domestic buyers. 'Lawnmowers, produced specifically for the US, are one such example,' he said. 'This mismatch between supply and demand makes it difficult to make the switch.' Chinese companies, long part of the global value and supply chains, would also likely face additional challenges in pivoting towards domestic consumers, Liu said, even with strong and efficient manufacturing systems and capabilities. 'They may have strong manufacturing capabilities but what (branding and image) will they sell under? They cannot use the brands of the multinational corporations they used to work for. Intellectual property issues could also arise,' he said. 'Once they lose guidance and support (traditionally) provided by these global multinational companies, many of them will struggle to compete in the domestic Chinese market.' Dr Chong Ja Ian, an associate political science professor at the National University of Singapore (NUS), noted a critical point: that overall consumer confidence in the country remained at record lows. 'The Chinese market has not been consuming much for some time (and) efforts over the years to boost consumer spending have not been all that successful,' Dr Chong said. He added that sectors like e-commerce platforms, low-cost electronics, apparel and supermarkets could support the switch. 'These might find it easier to make a switch even if domestic consumption is low but that may not be enough to boost the economy,' he said. Pivoting inwards might be 'a painkiller' for China's current economic woes but it would not likely solve the bigger 'underlying problem of excess capacity exacerbated by tariffs', said Gary Ng, a senior economist at Natixis, adding not all products catering to overseas markets would be suitable for Chinese consumers. 'Sectors with high overseas market reliance, such as textiles, toys, and renewables, will be hit the hardest,' Ng said. 'Some of these may heavily rely on overseas markets for existing revenue or new growth and China would not have sufficient demand to absorb the losses.' He added that it would not be easy for China to scale back on its role as the world's largest manufacturing hub. 'If Chinese exporters turn inward for demand, it will escalate price war with business closure and consolidation within the industries,' said Ng, also a research fellow at the Central European Institute of Asian Studies (CEIAS). '(They) can try to sell more to alternative markets, but it is also possible it will see backlash if it threatens the local industries of other countries.' LOOKING TO NEW MARKETS This explains why some Chinese firms are stepping up or pushing ahead with expanding into regional markets as part of diversification. For instance, Togran Electronic Technology, a Guangdong-based maker of gaming keyboards, mice and headsets, told CNA that it had been making plans 'as early as 2018' to expand into other markets. This year, it launched its first overseas factory in Vietnam ahead of US tariffs. 'We made a global layout in advance, including setting up our own plant in Vietnam so while there's still some impact, it's relatively limited,' a company spokesperson told CNA, adding that it was also eyeing new markets like African nations and Singapore as part of a wider global expansion strategy. Leading Chinese AI and voice-recognition technology firm iFLYTEK is planning to scale back its US presence due to rising trade tensions and will also focus on brand-building in new markets like Japan, South Korea, Southeast Asia, the Middle East and Europe. 'In these markets, we focus on growing our brand first and let the business follow gradually,' said iFLYTEK Vice President Vincent Zhan, who added that exports to North American markets would not be cut entirely but would be adjusted based on break-even viability. 'We are reducing investment and market integration efforts there,' Zhan said. 'There's too much uncertainty to make major moves.' Other non-exporting companies are also fearing consequences. 'We are expecting a ripple effect soon,' said Gary Su, a sales manager at G&G Smart Technology, a leading Guangzhou-based manufacturer of smart cards and other radio frequency identification (RFID) technology. The US might account for less than 2 per cent of overall sales but the firm is still bracing for spillover effects. 'Even if we're not hit directly, the impact will ripple through in a few months,' Su said. More exporters are now looking to regional markets as competition will inevitably intensify, Liu said. 'To survive, they will need to explore other markets and some might turn their back on China's own domestic market, which increases pressure across the board.' 'For now, we are adopting a wait-and-see approach,' Su said. 'We are staying active, joining exhibitions and expanding into new markets but also watching closely how global dynamics unfold.' Turning to new global markets like India, Southeast Asia and the Middle East could be a solution, experts said, but it would need to be backed by real integration. 'China will need to deepen ties with non-US markets,' Liu said. 'Without stronger alliances and integration with these economies, the potential of non-US markets can't be fully unlocked and excess capacity may turn into inefficient growth.' Xu Tianchen, a senior economist at the Economist Intelligence Unit (EIU), told CNA that China had already been diversifying trade with the Global South. 'Diversion via third countries is an option, and I don't think the US will have the capacity to block transshipment,' Xu added. 'Even if the US were to crack down on ASEAN, trade would still readily flow to new rerouting hubs such as Latin America and the Middle East.' 'Direct trade to the US will recover at some stage as sky-high tariff rates between China and the US are unsustainable and will eventually be walked back.'
