New Legal Framework to Bolster Private Enterprises
China has taken a major step to support its private sector by passing its first dedicated law aimed at promoting private enterprise. This move highlights the country’s intent to strengthen a vital part of its economy, which is the second-largest in the world.
The law was adopted on Wednesday during a session of the Standing Committee of the National People’s Congress. Following more than a year of legislative work, the law is set to take effect on 20 May 2025.
With 78 articles grouped into nine chapters, the law addresses various key areas. These include fair competition, investment promotion, technological innovation, regulatory support, legal safeguards, and the protection of private business rights.
China Ensuring a Level Playing Field
The new law is designed to improve the overall environment for private businesses. It seeks to ensure fair market competition for companies of all ownership types. In doing so, it aims to support the healthy growth of the private economy and those who work within it.
By offering clear rules and support mechanisms, the law sends a positive signal to private investors and entrepreneurs. It reinforces the government’s recognition of their role in China’s continued economic progress.
Private Sector’s Vital Role in the Economy
Private enterprises are already a cornerstone of China’s economic success. They contribute over 60 percent of the country’s gross domestic product and provide around 80 percent of jobs in urban areas.
As of the end of March 2025, China had more than 57 million registered private businesses. These made up over 92 percent of all companies in the country, underlining the sector’s vast scale and importance.
With the new law in place, China aims to give these businesses a more secure, supportive, and innovation-friendly environment to thrive.
with inputs from Reuters
