A milestone in the development of private economy

Editor's note: Liu Chunsheng, a special commentator on current affairs for CGTN, is an associate professor at the Beijing-based Central University of Finance and Economics. The article reflects the author's opinion and not necessarily the views of CGTN.

An important item discussed by the 13th session of the Standing Committee of the 14th National People's Congress held in Beijing from December 21 to 25 was the draft of a private sector promotion law. Some are also calling it the "Private Economy Promotion Law." This reflects the Chinese government's keen attention to the development of the private economy and marks a new stage in its development.

The private economy is an important part of China's market economy and a significant force driving economic and social development. By the end of September 2024, there were over 55 million registered private enterprises nationwide and 125 million individual businesses. This data demonstrates the vitality of the private economy and its irreplaceable role in the national economy.

The importance of the private economy is reflected in multiple aspects. It is a significant engine of economic growth. Under the innovation-driven development strategy, private enterprises, with their keen market sense and flexible institutional advantages, have become the main force in technological innovation and industrial upgrading.

The private economy is also the primary channel for employment. A large number of private enterprises absorb a substantial amount of labor force, alleviating employment pressure.

It is an important source of tax revenue. Private enterprises contribute a considerable portion of the national tax revenue, providing strong support for the country's fiscal balance and public services.

Particularly, it has demonstrated unique flexibility and resilience in responding to challenges. Whether in communications facilities, the Internet, and the digital economy, or electric vehicles and household appliances, they have become an important driver of the development of China's advanced productive forces.

Given the important position and contributions of the private economy, China attaches great importance to its healthy and sustainable development. The Third Plenary Session of the 20th Central Committee of the Communist Party of China (CPC) in July proposed formulating a private economy promotion law, which was not only an affirmation of the status of the private economy but also provided legal protection for its future development.

The recent Central Economic Work Conference also emphasized introducing a private economy promotion law, further demonstrating China's determination and strategic considerations.

Since the reform and opening up, the private economy has seen remarkable achievements. A private economy promotion law will establish policies and practices for the sector since the reform and opening up, especially since the 18th National Congress of the CPC in 2012, as legal systems. This will help consolidate reform achievements, address concerns, and boost confidence in the development of the private economy.

The daft provides provisions in terms of ensuring private businesses' fair participation and competition in the market, improving the investment and financing environment for these businesses, supporting their technological innovations, optimizing services and strengthening the protection of their rights and interests. 

For example, in terms of fair competition, the draft stipulates that various economic organizations can enter the fields outside the negative list for market access equally according to the law and regulations on implementing the fair competition review system. In terms of investment and financing, the draft reduces institutional transaction costs, and optimizes the investment and financing environment for the private economy. These measures will help break market barriers, optimize the business environment, and stimulate market vitality.

These measures will protect the legitimate rights and interests of private enterprises, enhancing their confidence and sense of security.

Besides encouraging and supporting the development of the private economy, the draft also emphasizes regulation and guidance. It stipulates that the production and business activities of private economic organizations will comply with laws and regulations and not hinder market and financial order, or seek profits through bribery and fraud. 

They should not damage the ecological environment, and impair the legitimate rights and interests of workers and social and public interests.

At the same time, the draft encourages private enterprises to participate in national scientific and technological research projects and supports capable organizations to take the lead in undertaking major technological research tasks. This will help integrate the private economy into national strategies, promote the entrepreneurial spirit, and improve its overall quality and development level.

As of the end of 2023, statistics show that the number of valid invention patents held by national high-tech enterprises and technology-based small and medium-sized enterprises reached 2.134 million, accounting for nearly three-quarters of the total held by domestic enterprises, indicating a continuous improvement in the innovation level of private enterprises.

The draft of the Private Economy Promotion Law also proposes supporting the open sharing of public research and development platforms and common technology platforms to provide equal services for technological innovation by private enterprises and promote in-depth industry-academia-research integration. These measures will help private enterprises better participate in national scientific and technological research projects and achieve high-quality development.

The rule of law is a basic way of governing a country and an important guarantee for the healthy development of the market economy. Taking measures to promote the development of the private economy according to legal norms will help build a legal environment and social atmosphere conducive to the common development of various ownership economies.

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