Private sector may see better legal scene

Experts expect steps like new law as enterprises' significance grows

China will likely take more steps to improve the legal environment for private sector businesses this year, including accelerating the formulation and promulgation of the law on promoting the development of the private sector, experts said on Tuesday.

They said the private sector accounts for over 60 percent of China's GDP, 70 percent of technological innovation and 80 percent of urban employment. Hence, more efforts should be made to boost the wavering confidence among private businesses, ensuring the sector's healthy development.

Their comments came after the country's top economic regulator pledged greater efforts to stimulate private investment and encourage more private capital to participate in the construction of major projects at the national level and projects that address weak links in the economy.

In an article published on Monday in Qiushi Journal, the flagship magazine of the Communist Party of China Central Committee, the Party leadership group of the National Development and Reform Commission vowed to promote the development of the private sector, requiring that legal and institutional arrangements must be made to ensure the equal treatment of private enterprises and State-owned enterprises.

"It is sending a clear signal that the country will continuously stimulate the vitality and dynamism of economic development, as part of its ongoing efforts to deepen reforms and opening-up, and spur innovation-driven growth," said Bai Wenxi, vice-chairman of the China Enterprise Capital Union.

"That indicates that the country will further promote market-oriented reforms, optimize the business environment and stimulate vitality and creativity of various market entities."

Bai said keeping policy consistent and stable will be key to promoting the healthy development of the private sector.

He further said supportive policy measures should be complemented by rule-of-law support for spurring the growth of private businesses.

"It is necessary to promptly draft and enact a law to promote the development of the private sector, providing stable and reliable legal support," he said, adding he expects to see new progress in efforts for the relevant legislation this year.

Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School, said the private sector is playing a key role in boosting innovation and spurring China's economic growth.

Looking ahead, Pan said more efforts should be made to boost confidence of private businesses, including stabilizing expectations on economic prospects, eliminating local protectionism and ensuring equal treatment of private enterprises and SOEs.

In 2023, China had made consolidated efforts to spur the growth of the private sector, including a series of measures to stimulate the vitality of private investment and boost confidence, and the establishment of an NDRC bureau for private sector development.

Yang Jinghao, chief economist at Concat Data Technology (Hangzhou) Co, said boosting the development of the private sector marks a key step in tackling challenges from both an external environment that has become more complicated in recent times and domestic structural problems.

"The healthy and sustainable development of the private sector will help foster smooth domestic circulation, spur innovation-driven growth and stabilize expectations," he said.

According to the National Bureau of Statistics, fixed-asset investment by the private sector edged down 0.5 percent year-on-year in the first 11 months of 2023 but was flat with the reading in the first 10 months.

"The private sector will face various challenges and opportunities ahead," said Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation's e-commerce research institute.

"China's steady economic growth and ongoing technological advancement will provide vast opportunities for private sector development, while the sector's constituent businesses will also face pressures from the sluggish global economic recovery, the rise of trade protectionism and intensified market competition."

Hong further said the government should continue to optimize the business environment, strengthen property rights protection and create a better institutional environment for the development of private enterprises.