On October 10, the Ministry of Justice and the National Development and Reform Commission (NDRC) released the Draft Law on the Promotion of the Private Sectorfor public consultation. This landmark legislation, consisting of 77 articles spread across nine chapters, aims to provide a robust legal framework to foster a healthy environment for private enterprises, a key pillar of China's economy. The draft seeks to ensure fair competition, improve access to financing, support technological innovation, and safeguard the rights and interests of private businesses.

The move to introduce the Private Sector Promotion Law comes in response to a key mandate of the Third Plenary Session of the 20th Central Committee of the Communist Party of China. The law emphasizes the vital role of the private sector in driving the nation's economic development, promoting long-term stability, and enhancing the country's ability to meet future challenges through a sound legal foundation.

Liu Min, Deputy Director of the Private Economy Development Bureau at the NDRC, highlighted the dual focus of the draft law: “The law not only encourages and supports private sector growth, but also emphasizes the importance of regulation and guidance to ensure orderly development. It reflects the central government's commitment to equal treatment and protection of private businesses in line with the rule of law.”

China's private sector has witnessed remarkable growth over the past decade. Currently, over 55 million private enterprises are registered, and the number of private firms listed among the Fortune Global 500 has surged from six in 2012 to 34 in 2023. The private sector has become an indispensable force in driving China's socio-economic development.

The proposed law covers a broad range of issues, from ensuring fair market access to supporting investment in strategic and emerging industries, as well as boosting innovation in traditional industries. By creating a more efficient investment environment, the law is designed to propel private companies into sectors such as modern infrastructure and cutting-edge technology. Private enterprises will also be encouraged to participate in national scientific research projects and lead major technological breakthroughs, further integrating them into China's strategic ambitions for innovation-driven growth.

Notably, the draft outlines the need for establishing an effective communication mechanism between the government and private enterprises. This mechanism is intended to ensure that private businesses can provide input on laws, regulations, and policies that affect their operations. The draft explicitly calls for seeking opinions from industry associations and chambers of commerce, thereby fostering closer collaboration between public authorities and private sector stakeholders.