China publishes draft law to promote private sector
The proposed law will ensure fair competition and improve private firms’ investment and financing environment
CHINA published a draft law on Thursday (Oct 10) aimed at promoting the development of the private sector, in the latest step to boost investor confidence in private firms amid an economic slowdown.
The country will solicit public feedback on the draft private economy promotion law until Nov 8, 2024.
“Promoting the sustained, healthy and high-quality development of the private economy is a major policy that the country has adhered to for a long time,” according to the draft law published online.
The proposed law, drawn up by the Ministry of Justice, the National Development and Reform Commission and other departments, will ensure fair competition and improve private firms’ investment and financing environment, according to the draft.
China will support private firms to participate in major national projects and reduce transaction costs, it added.
In addition, the state will ensure private firms have equal access to production factors and public service resources such as capital, technology, human resources, data, land and other natural resources, it said.
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The draft law has been listed on the 2024 legislation plan of the Standing Committee of the National People’s Congress and the Cabinet.
“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,” said 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.”
Authorities unveiled 31 steps to promote the private sector in July last year, pledging to make it “bigger, better and stronger”, but private investors have been reluctant to invest in the face of a fragile economic recovery.
In the first eight months, investment in the private sector fell 0.2 per cent from the same period a year earlier, in contrast to 6.0 per cent growth in the state sector, official data showed. REUTERS
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