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Chapter I. General Provisions

Article 6 [Original text

Article 6 Private economic organisations and their operators engaged in production and business activities shall abide by laws and regulations, comply with social morality and business ethics, be honest and trustworthy, engage in fair competition, fulfil their social responsibilities, safeguard the lawful rights and interests of workers, safeguard the national interests and public interests of the society, and accept the supervision of the government and the society.

[Interpretation of Provisions

This Article stipulates the basic code of conduct and obligations of private economic organisations and their operators in engaging in production and business activities, including abiding by the law, complying with morality, being honest and trustworthy, competing fairly, fulfilling social responsibilities (especially safeguarding the rights and interests of workers and protecting the state and public interests), and accepting supervision.

[Practical Guide

Private enterprises shall establish a sound internal compliance management system to prevent business risks, and may face multiple legal liabilities for violating the obligations in this article.

Article 7 [Original text

Article 7 The Federation of Industry and Commerce shall play an important role in promoting the healthy development of the private economy and the healthy growth of the members of the private economy, strengthen the ideological and political construction of the operators of the private economic organisations, guide the private economic organisations to operate in accordance with the law, and improve the level of service to the private economy.

[Interpretation of Provisions

This Article specifies the important role and specific duties of the Federation of Industry and Commerce (FIC) in promoting the ‘two health’, including strengthening ideological and political construction, guiding the operation in accordance with the law, and improving the level of service.

Practical Guide

Private enterprises can actively use the platform of FICCI to obtain information, reflect their demands and seek help. The FIC shall strengthen its own construction to serve the private economy.

Article 8 [Original text

Article 8 Strengthening publicity and reporting on private economic organisations and their operators' innovation and creation and other advanced deeds, supporting private economic organisations and their operators to participate in selection and commendation, guiding the formation of a social environment of respect for labour, creativity and entrepreneurs, and fostering an atmosphere of concern, support and promotion of the development of the private economy by the whole society.

[Article Interpretation

The purpose of this Article is to optimise the environment of social opinion and create a good atmosphere of respect and support for the development of the private economy through positive publicity (reporting on advanced deeds) and incentives (support for participation in selection and commendation).

[Relevant Laws and Regulations

Relevant national regulations on the management of news propaganda, spiritual civilisation construction, and evaluation and commendation activities.

Practical Guidelines

Private enterprises should focus on brand and image building, and the government and media should implement the responsibility of publicity to ensure the fairness of selection and commendation.

Article 9 [Original text

Article 9 The State shall establish and improve a system of statistics on the private economy, conduct statistical analyses of the development of the private economy, and regularly release relevant information.

Interpretation of the Article

The purpose of this Article is to provide data support for the formulation of policies and guidance of market expectations through the establishment of a sound system of statistics on the private economy, statistical analyses, and the release of information on a regular basis.

Practical Guidelines

Government departments shall ensure the accuracy and authority of statistical data; private enterprises have the obligation to co-operate with statistical surveys and may make use of the statistical information released to assist in decision-making.

Chapter II Fair Competition

Article 10 [Original text

Article 10 The State implements a nationally unified system of negative lists for market access. All types of economic organisations, including private economic organisations, may, in accordance with law, enter on an equal footing in areas outside the negative list for market access.

Interpretation of the Article

Background and Purpose: The purpose of this Article is to establish the basic rules for market access, break down various forms of market barriers, and safeguard the equal rights of all types of market entities (especially private economic organisations) in market access, which is the cornerstone for creating a fair and competitive market environment.

Article Interpretation.

a. "Nationally Unified Negative List System for Market Access":

 "Nationally Unified": emphasises the universal applicability and consistency of the system nationwide, and prevents localities from setting up another system or setting up access thresholds in disguise.

  "Negative List for Market Access": refers to the State Council's listing, in the form of a list, of industries, fields, businesses, etc., in which investment and operation are prohibited and restricted within the territory of the People's Republic of China. For those not on the list, in principle, all types of market players can enter on an equal footing in accordance with the law. This embodies the concept of ‘nothing is prohibited but can be done’.

b. "Fields outside the Negative List for Market Access": this is a broad space where private economic organisations can freely enter.

c. "All types of economic organisations, including private economic organisations, may enter on an equal footing in accordance with the law": this clarifies the equal status of private economic organisations under this system. The key words are ‘in accordance with the law’ and ‘equal’. The key words are ‘in accordance with the law’ and “equal”. ‘In accordance with the law’ means that the conditions and procedures stipulated in laws and regulations are met; ‘equal’ means that no discriminatory access conditions shall be set up on the basis of different forms of ownership.

Relevant regulations

a. Negative List for Market Access (Yearly Version): Issued annually or periodically by the State Council, it is the specific operational basis of this Article.

b. Foreign Investment Law of the People's Republic of China: The management mode of pre-access national treatment plus negative list is adopted, and this article is consistent with its spirit.

c. Regulations on Optimising Business Environment: Article 4 stipulates that the State shall improve market access and exit mechanisms that are unified, standardised, open and transparent, convenient and efficient.

d. Anti-Monopoly Law of the People's Republic of China: Article 39 prohibits administrative organs and organisations authorised by laws and regulations with the function of managing public affairs from abusing their administrative power to formulate regulations containing exclusions or restrictions on competition.

[Practical Guidelines

a. Enterprise investment decisions: Before making new investments or expanding business, private enterprises should first consult the latest version of the Negative List for Market Access to clarify whether the industry in question is prohibited or restricted. If not, they may enter in accordance with the law.

b. Claims: If a private enterprise encounters additional thresholds, hidden barriers, or discriminatory treatment set by local governments or relevant departments when entering non-negative-listed sectors, it can claim its rights and seek redress in accordance with this article and the Anti-Monopoly Law.

c. Regulation of Government Behaviour: When formulating policies related to market access, governments at all levels and their departments shall not violate the nationally unified negative list system, and shall not create additional permits or approvals in disguise, so as to ensure that areas not on the list are open to all market players.

d. Dynamic Attention: The Negative List for Market Access is dynamically adjusted, and enterprises should continue to pay attention to its updates and changes in order to adjust their business strategies in a timely manner.

(To be continued)

Special Announcement:

This article was originally written by JAVY law firm lawyers and represents only the author's own views, and shall not be regarded as a formal legal opinion or advice issued by JAVY law firm or its lawyers. If you need to reproduce or quote any of the content of this article, please indicate the source.