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Chapter V: Standardized Operations

Article 35 [Original Text]

Article 35 Private economic entities shall actively contribute to national priorities by playing a positive role in economic development, job creation, improving people's livelihoods, and technological innovation, thereby helping to meet the people's growing needs for a better life.

Interpretation of the Provision

Legislative Background and Purpose: This provision aims to guide private economic entities in integrating their development with the broader national development agenda, clarifying the positive role and contribution direction they should assume in economic and social development. This represents a macro-level requirement for the social responsibility of private enterprises.

Interpretation of the Provision: a. “Focusing on the broader national agenda”: Requires that the development direction and business activities of private enterprises align with the nation's overall strategic planning and central tasks. b. “Actively playing a role in developing the economy, expanding employment, improving people's livelihoods, and advancing scientific and technological innovation”: Lists key areas where private enterprises can contribute. ● Developing the economy: Promoting national economic growth through investment, business development, increased output, and wealth creation. ● Expanding employment: As the primary channel for job creation, providing more employment opportunities. ● Improving people's livelihoods: Enhancing living standards by offering quality products and services, participating in social welfare initiatives, and supporting rural revitalization. ● Technological innovation: As key drivers of technological advancement, propelling industrial upgrading and technical progress. c. “Contributing to meeting the people's ever-growing needs for a better life”: This represents the fundamental starting point and ultimate goal of corporate social responsibility, aligning with the Party's governance philosophy.

【Relevant Regulations】

● Company Law of the People's Republic of China: Article 5 stipulates that companies shall fulfill social responsibilities.

● National policy documents on encouraging employment, supporting technological innovation, and participating in social welfare initiatives.

● Charity Law of the People's Republic of China: Encourages enterprises to engage in charitable activities.

【Practical Guidelines】

a. Aligning with National Development Strategies: Private enterprises should proactively understand national macro policies and development plans when formulating their own strategies, integrating corporate growth with national needs and societal demands to identify development opportunities. b. Fulfilling Social Responsibilities: ● Integrate social responsibility into daily operations, such as prioritizing environmental protection, employee welfare, product safety, and social welfare alongside economic objectives. ● Actively participate in government-advocated social initiatives like the “Ten Thousand Enterprises Revitalizing Ten Thousand Villages” program. c. Enhancing Corporate Image: Proactive social responsibility contributes to elevated brand reputation and societal goodwill, strengthening corporate soft power and market competitiveness. d. Government Guidance and Incentives: Governments may implement policies to recognize outstanding private enterprises in social responsibility through commendations, tax incentives, or other forms of encouragement.

Article 36

Private economic entities shall comply with laws and regulations governing labor employment, workplace safety, occupational health, social security, ecological environment, quality standards, intellectual property, network and data security, fiscal taxation, and finance when engaging in production and business operations. They shall not seek improper gains through bribery or fraud, nor shall they disrupt market and financial order, damage the ecological environment, or infringe upon the lawful rights and interests of workers or the public interest. State organs shall supervise and manage the production and business operations of private economic organizations in accordance with the law.

[Interpretation of the Provision]

Legislative Background and Purpose: This provision constitutes the core clause governing the standardized operations of private economic organizations. It enumerates key areas of laws and regulations that enterprises must comply with in their production and business activities, while clearly defining prohibited conduct and the regulatory responsibilities of the government. This provision concretizes the requirement to “comply with laws and regulations” outlined in Article 6.

Interpretation: a. Paragraph 1: Compliance Obligations and Prohibited Conduct: ● “Comply with... laws and regulations”: Lists ten key compliance areas: ● Labor Employment: Comply with the Labor Law, Labor Contract Law, etc., to safeguard employee rights. ● Work Safety: Comply with the Work Safety Law, etc., to ensure production safety. ● Occupational Health: Comply with the Occupational Disease Prevention and Control Law, etc., to protect worker health. ● Social Security: Legally contribute to employees' social insurance programs. ● Ecological Environment: Comply with the Environmental Protection Law, etc., to prevent pollution and protect the environment. ● Quality Standards: Comply with the Product Quality Law, Standardization Law, etc., to ensure product and service quality. ● Intellectual Property: Respect and protect others' intellectual property rights while safeguarding one's own. ● Cybersecurity and Data Security: Comply with the Cybersecurity Law, Data Security Law, Personal Information Protection Law, etc. ● Fiscal and Taxation: Pay taxes in accordance with the law and comply with financial discipline. ● Finance: Comply with financial regulatory laws and regulations to maintain financial order. ● “Shall not seek improper benefits through bribery, fraud, or other means”: Prohibits illegal activities such as commercial bribery, contract fraud, and financial fraud. ● “Shall not disrupt market and financial order, damage the ecological environment, or harm the lawful rights and interests of workers and public interests”: Reiterates the fundamental principles of business operations. b. Paragraph 2: Government Regulatory Responsibilities: ● “State organs shall supervise and manage the production and business activities of private economic organizations in accordance with the law”: Clarifies that relevant government departments (e.g., market regulation, taxation, environmental protection, emergency management) possess statutory duties to oversee private enterprises, with regulatory actions required to be “in accordance with the law.”

【Relevant Regulations】

● Specific laws and regulations cited in this article include: the Labor Law of the People's Republic of China, the Work Safety Law of the People's Republic of China, the Environmental Protection Law of the People's Republic of China, the Tax Collection and Administration Law of the People's Republic of China, the Anti-Unfair Competition Law of the People's Republic of China (covering commercial bribery), and the Criminal Law of the People's Republic of China (covering crimes such as producing and selling counterfeit goods, contract fraud, and bribery). ● Regulations on Optimizing the Business Environment: Contains provisions for standardizing regulatory enforcement.

【Practical Guidance】

a. Comprehensive Compliance System Development: ● Private enterprises should treat this article as a “checklist” for compliant operations and establish a comprehensive compliance management system covering all listed areas. ● Conduct regular compliance risk assessments and internal audits to promptly identify and rectify issues. ● Strengthen compliance training for employees. b. Risk Prevention in Key Areas: Pay particular attention to high-risk areas such as work safety, environmental protection, finance and taxation, and data security to ensure adequate investment, sound systems, and clear accountability. c. Responding to Government Regulation: ● Actively cooperate with lawful supervision by state organs, provide truthful materials, and accept inspections. ● If regulatory actions are deemed improper, submit legal defenses, apply for administrative reconsideration, or initiate administrative litigation as permitted by law. d. Criminal Risk Prevention: Violations of these provisions may constitute criminal offenses under severe circumstances. Business operators and responsible personnel must exercise high vigilance.

Article 37

Support private capital in serving economic and social development, improve institutional rules governing capital activities, regulate and guide the healthy development of private capital in accordance with the law, and safeguard the socialist market economic order and public interests. Support private economic entities in strengthening risk prevention and management, and encourage them to excel in their core businesses, strengthen their industrial operations, and enhance their core competitiveness.

Interpretation of the Provision

Legislative Background and Purpose: Capital is profit-driven and requires regulation and guidance. This article clarifies the stance toward private capital: supporting its positive role while regulating its behavior to prevent disorderly expansion and risk accumulation, and encouraging private enterprises to focus on their core businesses and enhance competitiveness.

Article Interpretation: a. First Sentence: Regulating and Guiding Private Capital: ● “Supporting private capital in serving economic and social development”: Affirms the positive role of private capital. ● “Improve institutional rules for capital behavior”: Emphasizes regulating capital operations through institutional development. ● “Regulate and guide the healthy development of private capital in accordance with the law”: “Regulation” serves “healthy development,” while ‘guidance’ ensures alignment with national strategies and public interests. This involves oversight of capital investment directions, M&A activities, financial operations, etc. ● “Safeguard the socialist market economic order and public interests”: This represents the baseline for regulating capital behavior. b. Second Sentence: Enterprises' Own Risk Prevention and Development Direction: ● “Support private economic entities in strengthening risk prevention management”: Encourages enterprises to establish sound internal risk control systems to address market risks, financial risks, operational risks, etc. ● “Encourage private economic entities to excel in their core businesses and strengthen their real economy operations”: Guides enterprises to focus on core businesses, deepen engagement in the real economy, and avoid excessive diversification or shifting away from the real economy toward the virtual economy. ● “Enhance core competitiveness”: Strengthen market competitiveness through technological innovation, brand building, and management optimization.

【Relevant Regulations】

● Anti-Monopoly Law of the People's Republic of China: Establishes reporting and review requirements for business concentration (M&A), serving as a key legal framework for regulating capital activities. ● Securities Law of the People's Republic of China: Regulates listed company acquisitions, information disclosure, and related matters. ● Financial regulatory authorities' provisions on financial holding company supervision and preventing disorderly capital expansion in the financial sector. ● National policy documents promoting real economy development and high-quality manufacturing growth.

【Practical Guidelines】

a. Compliance in Private Enterprise Capital Operations:

● When engaging in capital operations such as investment M&A or entering the financial sector, fully understand and comply with relevant laws, regulations, and supervisory policies. Submit antitrust filings (if thresholds are met) and fulfill information disclosure obligations.

● Avoid reckless expansion and high-leverage operations; prioritize risk control. b. Focus on Core Business Development: ● Enterprises should define their core business direction based on their strengths and market demand, invest continuously, and strive to excel in niche sectors. ● Exercise prudence in evaluating non-core investments to prevent resource dispersion and hindrance to primary operations. c. Government Regulation and Services: ● When regulating capital activities, governments should adhere to market-oriented and rule-of-law principles, stabilize policy expectations, and avoid blanket approaches. ● Provide necessary policy support and services (e.g., R&D innovation, talent development, market expansion) to help enterprises concentrate on core businesses and enhance competitiveness. d. “Traffic Light” System: The state implements a “traffic light” system for capital to clarify encouraged, restricted, or prohibited sectors, guiding orderly capital development. Private enterprises should monitor relevant policy directions.