On April 30, 2025, the Standing Committee of the 14th National People’s Congress passes the Private Sector Promotion Law (the Law), which will come into effect on May 20, 2025.
The Law contains 78 provisions in nine chapters, which are General Principles, Fair Competition, Investment and Financing Promotion, Technology Innovation, Regulating Operation, Service Guarantee, Rights and Interests Protection, Liabilities, and Supplementary Provisions.
It is worth noting that the Law specifies for the first time that “Promoting a sustained, healthy and high-quality development of the private economy is a major policy that the State has long adhered to.” The private economic organizations in the Law refer to “profit-making legal persons, unincorporated organizations and individual industry and commerce household established in the territory of the People's Republic of China in accordance with the law and held or actually controlled by Chinese citizens, as well as profit-making legal persons and unincorporated organizations held or actually controlled by the aforesaid organizations. Where a private economic organization involves foreign investment, the relevant provisions of laws and regulations on foreign investment shall also apply.”
In terms of fair competition, the Law provides that China implement a nationally unified negative list system for market access, and various economic organizations, including those from the private sector, may equally enter the fields outside the negative list in accordance with the laws. The Law also provides that the government shall carry out measures to make sure the private sector fairly participate in the market competition, such as timely clean-up and abolition of policies and measures containing elements that impede the national unified market and fair competition, and so on.
The Law supports the private sector to participate in major national strategies and major projects and to invest and start businesses in strategic emerging industries and future industries. It also encourages the private sector to conduct the technological transformation and upgrade the traditional industries and participate in the investment and construction of modern infrastructure. In terms of financing, the Law provides that the banking and financing institutions shall support the private sector, such as equal treatment to the private sector in the granting of credit, credit management, risk control management, service charges, and so on.
The Law supports the private sector to play an active role in promoting scientific and technological innovation, fostering new productive forces, and building a modernized industrial system. The private sector is supported to participate in activities including, but not limited to, the national science and technology research program, digitalization, intelligent common technology research and development, data factor market construction, and so on.
To make sure of a healthy development of the private sector, the Law provides that the private sector shall abide by laws and regulations, improve governing structure and management systems, and regulate the operators’ behaviors. The private sector is also forbidden to disrupt the market and financial order, profit by means of bribery and fraud, damage the ecological environment, jeopardize the legitimate rights and interests of workers and the public interests of society, and so on.
The Law specifies various service guarantees provided to the private sector, including but not limited to establishing a smooth and effective communication mechanism between government and enterprises, formulating policies to encourage entrepreneurship in the private sector, setting up a sound mechanism for handling complaints and reports of administrative law enforcement violations, improving a sound system of disciplinary sanctions for breach of trust and credit repair, and so on.
Regarding the rights and interests protection, the Law states that “the legitimate rights and interests of private economic organizations and their operators, such as personal rights, property rights, business autonomy, and so on, are protected by law” and “the right to name, reputation, and honor of the private economic organizations and the right to reputation, honor, privacy, personal information, and other personality rights and interests of the operators of private economic organizations are protected by law.” The Law further regulates that the coercive measures involving the restriction of personal freedom and the seizure, detention, and freezing of property shall be carried out in accordance with legal authority, conditions, and procedures; the use of administrative and criminal means to intervene in economic disputes in violation of the law is prohibited, as well as refining the case-handling procedures and regulating off-site law enforcement, and so on.
The Law also includes a chapter of liabilities to make sure the measures provided therein are carried out. For instance, it states that “Where expropriation, requisition, or measures such as seizure, detention, or freezing are carried out in violation of the provisions of the law, the competent authority shall order rectification, and compensation shall be paid in accordance with the law if losses are incurred; where adverse consequences or repercussions are caused, the leaders and persons directly responsible shall be given penalties in accordance with the law. In case the implementation of off-site law enforcement is in violation of the provisions of the law, the competent authority shall order rectification; if adverse consequences or repercussions are caused, the leaders and persons directly responsible shall be given sanctions in accordance with the law.”
As the first law regarding the private sector, it addresses many issues that are of concerned by the private sector, including, but not limited to fair participation in the market competition, equal use of elements and public resources such as funding, technologies, human resources, data, land, and so on, equal protection under the laws, etc. It is reported that there will be a total investment amount of 3 trillion yuan in good projects in the fields of transportation, energy, water resources, new-type infrastructure, city infrastructure, etc, and the enterprises from the private sector will be supported to participate in them.
The Law contains 78 provisions in nine chapters, which are General Principles, Fair Competition, Investment and Financing Promotion, Technology Innovation, Regulating Operation, Service Guarantee, Rights and Interests Protection, Liabilities, and Supplementary Provisions.
It is worth noting that the Law specifies for the first time that “Promoting a sustained, healthy and high-quality development of the private economy is a major policy that the State has long adhered to.” The private economic organizations in the Law refer to “profit-making legal persons, unincorporated organizations and individual industry and commerce household established in the territory of the People's Republic of China in accordance with the law and held or actually controlled by Chinese citizens, as well as profit-making legal persons and unincorporated organizations held or actually controlled by the aforesaid organizations. Where a private economic organization involves foreign investment, the relevant provisions of laws and regulations on foreign investment shall also apply.”
In terms of fair competition, the Law provides that China implement a nationally unified negative list system for market access, and various economic organizations, including those from the private sector, may equally enter the fields outside the negative list in accordance with the laws. The Law also provides that the government shall carry out measures to make sure the private sector fairly participate in the market competition, such as timely clean-up and abolition of policies and measures containing elements that impede the national unified market and fair competition, and so on.
The Law supports the private sector to participate in major national strategies and major projects and to invest and start businesses in strategic emerging industries and future industries. It also encourages the private sector to conduct the technological transformation and upgrade the traditional industries and participate in the investment and construction of modern infrastructure. In terms of financing, the Law provides that the banking and financing institutions shall support the private sector, such as equal treatment to the private sector in the granting of credit, credit management, risk control management, service charges, and so on.
The Law supports the private sector to play an active role in promoting scientific and technological innovation, fostering new productive forces, and building a modernized industrial system. The private sector is supported to participate in activities including, but not limited to, the national science and technology research program, digitalization, intelligent common technology research and development, data factor market construction, and so on.
To make sure of a healthy development of the private sector, the Law provides that the private sector shall abide by laws and regulations, improve governing structure and management systems, and regulate the operators’ behaviors. The private sector is also forbidden to disrupt the market and financial order, profit by means of bribery and fraud, damage the ecological environment, jeopardize the legitimate rights and interests of workers and the public interests of society, and so on.
The Law specifies various service guarantees provided to the private sector, including but not limited to establishing a smooth and effective communication mechanism between government and enterprises, formulating policies to encourage entrepreneurship in the private sector, setting up a sound mechanism for handling complaints and reports of administrative law enforcement violations, improving a sound system of disciplinary sanctions for breach of trust and credit repair, and so on.
Regarding the rights and interests protection, the Law states that “the legitimate rights and interests of private economic organizations and their operators, such as personal rights, property rights, business autonomy, and so on, are protected by law” and “the right to name, reputation, and honor of the private economic organizations and the right to reputation, honor, privacy, personal information, and other personality rights and interests of the operators of private economic organizations are protected by law.” The Law further regulates that the coercive measures involving the restriction of personal freedom and the seizure, detention, and freezing of property shall be carried out in accordance with legal authority, conditions, and procedures; the use of administrative and criminal means to intervene in economic disputes in violation of the law is prohibited, as well as refining the case-handling procedures and regulating off-site law enforcement, and so on.
The Law also includes a chapter of liabilities to make sure the measures provided therein are carried out. For instance, it states that “Where expropriation, requisition, or measures such as seizure, detention, or freezing are carried out in violation of the provisions of the law, the competent authority shall order rectification, and compensation shall be paid in accordance with the law if losses are incurred; where adverse consequences or repercussions are caused, the leaders and persons directly responsible shall be given penalties in accordance with the law. In case the implementation of off-site law enforcement is in violation of the provisions of the law, the competent authority shall order rectification; if adverse consequences or repercussions are caused, the leaders and persons directly responsible shall be given sanctions in accordance with the law.”
As the first law regarding the private sector, it addresses many issues that are of concerned by the private sector, including, but not limited to fair participation in the market competition, equal use of elements and public resources such as funding, technologies, human resources, data, land, and so on, equal protection under the laws, etc. It is reported that there will be a total investment amount of 3 trillion yuan in good projects in the fields of transportation, energy, water resources, new-type infrastructure, city infrastructure, etc, and the enterprises from the private sector will be supported to participate in them.