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South China Morning Post
01-05-2025
- Business
- 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.
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Business Standard
30-04-2025
- Business
- Business Standard
Hoping to regain investor trust, China enacts its first private sector law
China's Private Economy Promotion Law aims to level the playing field for private firms, protect against unfair treatment, and revive business confidence amid US trade tensions New Delhi China has approved its first comprehensive law aimed at supporting and protecting the country's private sector, state media Xinhua reported. This law has been a long-awaited move that aims to revitalise domestic business activity amid ongoing domestic economic challenges in China, as well as its ongoing trade war with the United States. The Private Economy Promotion Law was approved by the Standing Committee of the National People's Congress (NPC) on Wednesday and will come into force on 20 May 2025. What is China's new Private Economy Promotion Law? The Private Economy Promotion Law is the first of its kind to specifically focus on the private economy, which plays a central role in China's growth, innovation, and employment. The drafting process began in 2024 under the guidance of the National Development and Reform Commission. A draft version was opened to public feedback last October, and a second reading in February 2025 triggered further debate around issues of enforcement and market access. Why China's new private sector law is a big policy shift The passage of the law marks a formal shift in policy as Beijing looks to enshrine long-standing pledges into legislation, especially to ensure private companies are treated on par with state-owned enterprises. How China's private sector law promotes fair competition with state firms With 78 articles in total, the new law sets out to level the playing field between private enterprises and state-owned firms. It introduces provisions to promote fair competition, improve access to investment and financing, and reinforce protections for private businesses against arbitrary fines and intrusive law enforcement. While the full text of the law has not yet been released, officials say it enshrines long-standing policy commitments into a legal framework for the first time. Tang Dajie, a senior researcher with the China Enterprise Institute, told the South China Morning Post that the new legislation is expected to curb the misuse of power by local authorities and bring more standardisation and fairness to how laws are enforced. However, questions remain about how effectively the law will be implemented, as it does not include a specific enforcement mechanism to guarantee these rights. Why China's private businesses need legal protection and reforms China's private businesses currently account for over 60 per cent of national GDP, 70 per cent of technological advancements, and 80 per cent of urban employment, according to data cited by Bloomberg. By the end of March 2025, more than 57 million private enterprises had been registered, making up over 92 per cent of all firms in the country. Despite their contribution, many private firms have voiced concerns in recent years about inconsistent treatment, restricted market access, and aggressive regulatory actions. Business leaders have also complained of overreaching law enforcement practices, such as unjustified asset seizures and excessive penalties. Challenges and criticisms of China's private sector legislation Critics, as cited by Bloomberg, have pointed out that while the law is a game changer for the private sector, it lacks an enforcement mechanism to provide legal protections to ensure such rights, raising questions on whether it will make a substantive change. Why US trade war and weak demand drove China's private sector law The move comes amid mounting economic pressure. With trade tensions with the United States intensifying and domestic consumption lagging, China is increasingly reliant on domestic engines to keep growth on track. With foreign demand uncertain and consumption sluggish at home, policymakers are turning to the private sector to stabilise the economy and drive innovation. Officials see this law as a way to restore investor confidence and reinvigorate business activity. While investment from private firms has declined in recent years due to regulatory uncertainty and weaker demand, there are signs of a tentative recovery. In the first quarter of 2025, private sector investment recorded a modest year-on-year rise of 0.4 per cent.
CNA
30-04-2025
- Business
- CNA
China passes law aimed at shoring up private businesses amid US trade tensions
BEIJING: China's top legislature passed a keenly anticipated law on Wednesday (Apr 30), state news agency Xinhua reported, to help shore up the private sector amid trade tensions with the United States. The Private Economy Promotion Law will take effect from May 20 and includes provisions on fair competition, access to investment and financing and rights protections. The new law "will further optimise the development environment for private businesses, ensure fair market competition among all types of economic entities, promote the healthy growth of both the private economy and private entrepreneurs", Xinhua said. It consists of nine chapters and 78 articles, including fair competition, investment and financing promotion, technological innovation, and rights protection, it added. A senior researcher at a Beijing think tank told South China Morning Post that the law would also prevent local authorities from unfairly targeting private businesses. '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,' said Tang Dajie, a senior researcher with the China Enterprise Institute think tank. 'The law will restrict the law enforcement power of the public security department and promote strict, standardized, fair and civilized law enforcement.' China's top prosecutors have earlier also promised to give more legal protection to private businesses, pledging to crack down on illegal investigations targeting the sector. Du Xueyi, head of economic crime prosecution under the Supreme People's Procuratorate, reportedly said in February that Beijing would 'resolutely correct profit-driven illegal law enforcement, such as illegal case filings, involvement in economic disputes, cross-regional arrests, and unlawful sealing, confiscation or freezing of assets'. The government has in recent months unveiled a raft of measures to support the depressed private firms and the economy, which has been reeling from weak domestic consumption and a destabilising debt crisis in the property sector. The private sector in China, which competes with state-owned companies, contributes more than half of tax revenue, over 60 per cent of economic output and 70 per cent of tech innovation, official estimates show.
South China Morning Post
11-03-2025
- Business
- South China Morning Post
Further tweaks expected to China's draft private sector promotion law
Beijing is poised to add more detailed measures to its draft private economy promotion law, after last month's second review of the proposed legislation by lawmakers sparked wider discussions on market entry and enforcement issues, analysts said. Advertisement The drafting of the law began last year as the Chinese authorities made the revitalisation of domestic dynamism a priority. However, it was not deliberated over or passed at the annual session of the National People's Congress (NPC) – the country's top legislature – which concluded on Tuesday. That may be due to the complex nature of the new law, which is designed to augment legal protections, and should not be interpreted as a delay, said Tang Dajie, a senior researcher with the China Enterprise Institute think tank in Beijing. 'The law may still need to be tweaked to incorporate feedback and implementation details,' he said. 'It may be passed when the NPC's Standing Committee meets in April or June.' The proposed law is part of Beijing's efforts to reboot the slumping private sector, as the Chinese economy braces for more external challenges amid rising geopolitical and trade rifts. Advertisement China's unbalanced economic recovery, sluggish consumption and regulatory uncertainties have sapped investor sentiment for years. The private sector's long-standing gripes, including the curtailment of market access and perceived favouritism towards the state sector, are yet to be fully addressed, even though the private sector accounts for 60 per cent of the country's gross domestic product.
