On 30 Apr. 2025, China’s top legislature, the Standing Committee of the National People’s Congress, adopted the “Private Economy Promotion Law of the People’s Republic of China” (中华人民共和国民营经济促进法, hereinafter the “Law”), which came into force on 20 May 2025.
This is China’s first fundamental law dedicated to the development of the private economy. Comprising nine chapters and 78 articles, the Law aims to ensure fair competition and optimize the business environment for private enterprises through mechanisms such as fair competition, investment and financing support, scientific and technological innovation incentives, standardized operations, service guarantees, and rights protection.
The highlights of the Law are as follows.
- The Law implements a unified national negative list for market entry, ensuring that private enterprises can compete fairly and guaranteeing the “permission unless prohibited” principle.
- The government is launching a CNY 3 trillion investment program in key sectors, allowing private enterprises to participate in major projects such as nuclear power, transportation, and renewable energy.
- Authorities are reducing government-backed financing guarantee fees to below 1% and increasing the non-performing loan tolerance ratio for small and micro businesses by 3 percentage points.
- A sci-tech finance innovation mechanism has been established, expanding intellectual property pledge financing pilots to 74 funds and rolling out tech M&A loans in 18 cities.
As of the end of January 2025, the number of registered private enterprises nationwide reached 56.707 million.
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