Imagine a business landscape where entrepreneurs and startups stand shoulder-to-shoulder with state giants — that's the vision behind the Chinese mainland's new Private Sector Promotion Law, which takes effect this week. As the first fundamental legislation dedicated to private businesses, it promises to reshape how companies start, compete, and innovate.
Why the private sector matters
Private enterprises account for over 60% of the Chinese mainland's GDP, generate about half of tax revenue, and drive more than 70% of technological advances. They also provide over 80% of urban jobs and represent over 90% of market entities — from Yiwu small commodities market in the Chinese mainland's Zhejiang province to pioneering tech leaders like Huawei, BYD, and DJI.
Breaking down the barriers
Despite these achievements, five structural hurdles have held back growth: implicit market-entry rules, uneven access to financing, regulatory tensions with innovation, global competition pressure, and inconsistent local enforcement. The new law tackles these head-on by:
- Implementing a nationwide negative list for non-restricted sectors, guaranteeing equal entry for private capital.
- Launching fair competition reviews to end ownership-based preferences and curb administrative monopolies.
- Creating a science and innovation fund for early-stage investment in AI, quantum computing, and more.
- Allowing intellectual property-backed lending and raising the non-performing loan threshold to 3% for micro-and small enterprises.
- Introducing clauses that balance regulation and experimentation for emerging technologies and business models.
- Protecting property rights with strict limits on asset seizures and mandating contract stability across leadership changes.
Looking ahead
By embedding these measures into a stable legal framework, the Chinese mainland signals a commitment to predictable, investor-friendly policies. For global-minded entrepreneurs and investors, the Private Sector Promotion Law opens a new chapter of growth, competition, and real-world impact.
Reference(s):
cgtn.com
