TMTPost -- China is poised to promote the private sector with a legislation that underscores equal treatment and protection for private enterprises, part of further efforts to revive the economy.

Credit：Xinhua News Agency

China's Ministry of Justice and the National Development and Reform Commission (NDRC) published a draft of the private sector promotion law to solicit public opinion until November 8, 2024, according to a notice on the NDRC website released Thursday. The draft, with 77 articles in nine chapters, features equal treatment and protection of private sector businesses, the state news agency Xinhua reported.

The draft includes provisions on 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 for them and strengthening the protection of their rights and interests. It also covers measures to better regulate and guide the enterprises, to promote the healthy development of private businesses and the healthy growth of relevant businesspersons, while safeguarding the legitimate rights and interests of their employees.

The draft proposes supporting private enterprises in investing and starting businesses in strategic emerging industries and future industries. It also encourages efforts to upgrade and transform traditional industries and to participate in the investment and construction of modern infrastructure.

It proposes supporting private enterprises in participating in national scientific and technological research projects. It also supports capable private enterprises in leading major technological breakthroughs and grants them access to national major research infrastructure. It also explicitly states the need to establish a smooth and effective communication mechanism between the government and enterprises.

The draft marks a major step forward in reinvigorating a sector key to the growth of the nation, the state-backed newspaper China Daily cited experts. According to experts, the draft law marks China's very first basic legislation regarding the development of the private economy, and it aims to create a better environment that fosters fair competition, facilitates private investment, supports technological innovation, and protects the legal rights and interests of private businesses.

The draft law offers great reassurance for the private economy and private entrepreneurs, as it has demonstrated the great importance attached by the country to the sound development of the private economy, said Cao Heping, an economist from Peking University, according to another Chinese state-backed media newspaper  the Global Times. "The draft law is very detailed in its content covering all aspects of the development of the private economy, which is very helpful," Cao told the paper.

"The draft is expected to provide a legal basis of solving some problems in the economy, such as the detention of entrepreneurs, fair competition in government procurement and tender, as well as the problem of arrears," Reuters cited Tianchen Xu, an economist at the Economist Intelligence Unit. "It will definitely have a positive effect on the business environment… but the low confidence of private firms is also related to the economic downturn which requires both legislation and expansionary macro economic policies," said Xu.

NDRC, China’s top economic planner, earlier this week pledged a raft of economic stimulus at press conference, though it still fell short of investors’ anticipation of a much larger package of stimulus measures.

China’s central government will allocate a total of RMB200 billion (US$28 billion) which are originally in next year’s plan to local governments later this year, including a RMB100 billion investment plan from the central government’s budget and another RMB 100 billion for projects to fund so-called “dual important projects”--major national strategies and security capability, said Zheng Shanjie, head of the NDRC. Earlier release of these investment projects will support local governments in accelerating the preliminary work and construction, Zheng told reporters.

A certain proportion of these projects will involve urban renewal, mainly in the construction of pipelines for gas, water, sewage and heating, which is expected to generate investment demand of around RMB4 trillion in the coming five years, said NDRC deputy head Liu Sushe at the same press conference.

As part of efforts on the investment front, ultra-long special treasury bonds will continue to be issued next year with optimized investment areas to implement major national strategies and build up security capacity in key areas, Zheng noted. China has planned 1 trillion-yuan issuance of ultra-long special treasury bonds this year to support dual important projects. NDRC deputy chairman Liu also urged local governments to complete the issuance of the remaining RMB290 billion of local special bonds by the end of this month.