This is a specialized legislative research report published by the National Diet Library in the "Foreign Legislation" series in August 2025, dealing with legal analysis of China's Private Economy Promotion Law enactment. It is created as part of a special feature themed "Regulation and Protection of Business Activities."
Background of Private Economy Promotion Law Enactment
In China's economy, private enterprises account for approximately 60% of GDP, 80% of urban employment, and 70% of technological innovation, making them important economic actors. However, under previous legal frameworks, institutional protection was insufficient compared to state-owned enterprises, with issues including financing difficulties, administrative procedure complexity, and inadequate intellectual property protection. Parallel to the "common prosperity" policy under the Xi Jinping administration, the need for legal system support for healthy private enterprise development increased, leading to the enactment of comprehensive private economy promotion legislation.
Main Content and Characteristics of the Law
The Private Economy Promotion Law establishes simplified permit systems for small-scale accommodation businesses, with pillars including clarification of private enterprises' legal status, fair competition environment development, financial access improvement, intellectual property protection strengthening, administrative procedure simplification, and tax incentive measure expansion. Particularly noteworthy are provisions ensuring "competitive neutrality" between state-owned and private enterprises, expanding private enterprise participation opportunities in government procurement, and ensuring consistency with antitrust law.
Balance of Corporate Regulation and Protection
While eliminating excessive regulation of private enterprises, this law also establishes clear frameworks for social responsibilities including environmental protection, worker protection, consumer rights protection, and data security. It constructs a legal framework balancing appropriate regulation and support from perspectives of monopoly regulation for digital platform enterprises, financial risk management, and national security considerations.
Relationship with International Economy
China's Private Economy Promotion Law considers international aspects including consistency with World Trade Organization (WTO) rules, responses to multilateral economic agreements such as RCEP (Regional Comprehensive Economic Partnership) and CPTPP (Comprehensive and Progressive Trans-Pacific Partnership), and coordination with foreign investment policies. Particularly in the context of trade friction and technological competition with the US, it is positioned as strategic legislation to improve China's technological innovation capability and economic competitiveness.
Consistency with Socialist Market Economy System
This law addresses the complex challenge of legally guaranteeing the role and status of private economy while maintaining the basic principles of China's socialist market economy system. It is evaluated as a legal response to uniquely Chinese political-economic challenges of how to balance state-owned enterprise-led economic development models with private enterprise vitalization, and how to harmonize party leadership with market mechanisms.
The article provides specialized analysis from comparative legal perspectives on how China's Private Economy Promotion Law influences other socialist market economy countries and developing countries' industrial policies, and what characteristics and significance it holds within international trends of corporate regulation and protection.