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How rule of law is further empowering China's private economy

Xinhua | Updated: 2025-05-01 10:31
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An employee works on the assembly line of a tractor manufacturer in Weifang, Shandong province. LI ZIHENG/XINHUA

The passage of China's first national law focused on the private sector reflects the country's concrete actions to provide legal guarantees of fair competition and equal treatment for the private economy, while also bolstering high-quality development within this economically crucial sector.

The socialist market economy is essentially a law-based economy. The private sector promotion law, passed Wednesday by the Standing Committee of the National People's Congress, the country's top legislature, marks a crucial step in the promotion of a sound legal environment for the Chinese socialist market economy.

The message is clear: the private sector is an important part of China's socialist market economy. The importance of the sector cannot and will not be changed, as the law stipulates that it is a significant and long-term policy to promote the sustainable, healthy and high-quality development of the private economy.

The private sector has flourished under China's reform and opening-up policy, and has grown from a supplement for the public economy to an integral and important part of the Chinese socialist market economy.

Data speaks for itself. Officially registered private enterprises in China have surpassed 57 million, accounting for 92.3 percent of the total number of business entities. Furthermore, private enterprises contribute more than 50 percent of the tax revenue, more than 60 percent of GDP, over 70 percent of technological innovation achievements and more than 80 percent of urban employment.

"Unswervingly consolidating and developing the public sector and unswervingly encouraging, supporting, and guiding the non-public economy" is part of the country's long-standing and major economic policy, demonstrating the Communist Party of China and the government's unwavering support for the private sector.

The Chinese authority has delivered strong support to the private sector over the past few decades. However, private enterprises still encounter difficulties and challenges. Discriminatory enforcement and market access and financing obstacles once fueled deceleration of the private investment.

The private sector promotion law provides assurances that private enterprises enjoy legal status, market opportunities, and development rights equal to other economic entities. It also ensures equal treatment in competition, investment, financing, and support for technological innovation.

Through its regulatory role, the law helps stabilize expectations and boost confidence, spur vitality of the sector and spark entrepreneurial investment enthusiasm, laying a solid foundation for the sustained prosperity of the economy.

The law stipulates that in areas other than the negative list for market access, all kinds of economic organizations, including private economic organizations, can enter on an equal footing in accordance with the law.

It is well known that the rule of law plays a crucial role in the market economy. The private sector promotion law not only helps maintain economic order and protect the legitimate rights and interests of private enterprises, but also promotes the healthy development of the economy by providing legal guarantees and guiding economic behaviors.

While reassuring private investors, the law also improves the business environment for foreign investors who see the law serve as a mirror reflecting China's determination to provide a law-based business environment.

As China's consumption structure and industrial structure are constantly upgrading, there is huge space for the development of the private economy, especially on the back of a huge market with a population of 1.4 billion, including a middle-income group of over 400 million people.

As part of China's efforts to further deepen reform comprehensively, support from all levels of government is provided to promote sustainable, healthy, and high-quality development of the private sector. Amid external headwinds, it's necessary and timely. Furthermore, it also represents the certainty that China offers to the world.

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