BEIJING, April 30 (Xinhua) -- China's top legislative body passed the private sector promotion law on Wednesday, establishing a legal backing for the steady and healthy growth of the vast sector, including more than 57 million private firms and over 100 million self-employed individuals.
As China's first fundamental legislation dedicated to the private sector, the new law will bolster confidence among the vast community by improving the business environment, fostering innovation, and ensuring fair competition -- key steps to sustaining high-quality growth in the world's second-largest economy amid growing external uncertainties, experts noted in the latest episode of the China Economic Roundtable, an all-media talk show hosted by Xinhua News Agency.
STRONG SHOT OF REASSURANCE
China's socialist market economy operates under a framework where public ownership, manifested by entities such as state-owned enterprises, is the mainstay while multiple forms of ownership coexist. The private sector, including private enterprises and individual businesses, is a major component of the non-public economy.
The new law enshrines into legal doctrine the long-standing principle of "unswervingly consolidating and developing the public sector and unswervingly encouraging, supporting, and guiding the development of the non-public sector." It also explicitly states that promoting the private sector's sustained, healthy and high-quality development is a long-term major national policy.
It marks the first time these principles have been codified, providing stronger legal protection for private businesses, according to Yang Heqing, an official with the Legislative Affairs Commission of the National People's Congress Standing Committee.
"The legislation reflects China's clear stance and firm resolve to support private-sector growth," said Liu Min, deputy director of the National Development and Reform Commission's private economy development bureau, a new institution set up in 2023 by the country's top economic planner to coordinate efforts to facilitate private-sector development.
The passing of the law was warmly welcomed by many entrepreneurs.
The law transforms policy support into legal guarantees, giving entrepreneurs greater reassurance and motivation to keep moving forward, said Qi Xiangdong, chairman of cybersecurity firm Qi-Anxin and vice chairman of the All-China Federation of Industry and Commerce.
"The rule of law is the best business environment," Qi said.
ALL-ROUND, TARGETED PROMOTION
The legislation takes direct aim at some of the biggest challenges facing private businesses, with specific mandates to address the community's major concerns.
From ensuring fair market access and financing opportunities to enhancing services and promoting standardized operations, the legislation provides concrete measures to encourage, support, and guide private-sector growth.
"The law adopts a problem-oriented approach," Yang noted, as both external factors and internal weak links affecting the private sector's development have been taken into consideration.
By incorporating lessons from past reforms and practical experience, the law refines relevant institutions and measures and ensures alignment with existing laws, Yang said.
Qi, a veteran entrepreneur, highlighted the law's focus on scientific innovation and facilitating financing for the private sector, which is critical for sectors like cybersecurity, where long development cycles require stable cash flow.
China in recent years has stepped up efforts to channel more financing support to the private sector, most of which are small and medium-sized enterprises (SMEs). As of the end of March, the outstanding amount of inclusive micro and small loans increased by 12.2 percent year on year, with loans to technology-based SMEs growing by over 20 percent.
BIG ROLE TO PLAY AHEAD
The law was timely for China's economy, which faces increasing impact from external shocks. Boosting the private sector, a heavyweight in manufacturing, digital economy, green tech and many other fields, is seen as essential to consolidating the country's sustained economic recovery.
In 2024, private enterprises contributed over half to China's foreign trade and tax revenue, while accounting for more than 80 percent of urban employment. More importantly, they are playing a major role in sharpening the country's innovation edge, generating over 70 percent of China's technology innovation achievements.
"The private sector is a vital force in advancing China's modernization and serves as an important foundation for the Chinese economy's high-quality development," said Sheng Laiyun, deputy head of the National Bureau of Statistics.
China's private sector has posted positive growth momentum recently, echoing the overall upward economic trajectory.
In the first quarter (Q1), some 1.98 million new private enterprises were registered nationwide, marking a year-on-year increase of 7.1 percent, surpassing the average growth rate of the past three years. Investment by the private sector reversed its decline from the previous year by increasing 0.4 percent year on year in Q1.
Official data released on Wednesday showed that business confidence of China's manufacturing and service enterprises remain robust, with their index gauging business expectations both remaining in the expansionary territory in April.
Qi said the company will focus on what high-tech firms do best -- innovating, upgrading industries, and competing globally. "We're now better positioned to become a more creative, competitive, and responsible driving force in this new era." Enditem
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