On 20 May 2025, the Promotion of Private Economy Law of the People's Republic of China, hailed as a ‘milestone in the development of private enterprises’, formally came into effect. As China's first foundational legislation specifically regulating the development of the private economy, the enactment of this law marks the entry of private economic development into a new phase of rule-of-law and standardisation, providing robust institutional safeguards for the ‘two unwavering principles’.
Comprising 9 chapters and 78 articles, the Promotion of Private Economy Law covers core aspects including general provisions, fair competition, investment and financing promotion, technological innovation, standardised operations, service guarantees, rights protection, legal liabilities, and supplementary provisions. Its legislative origins trace back to explicit directives from the Third Plenary Session of the 20th CPC Central Committee. The law aims to codify major policies, institutional achievements, and practical experience regarding private economic development—particularly since the new era—into binding legal norms through legislative procedures, thereby establishing a legal framework for private economic advancement.
From the ‘31 Measures for the Private Economy’ to the ‘Private Economy Promotion Law,’ policies have evolved iteratively. Yet entrepreneurs remain more concerned about whether the law can finally put an end to the practice of ‘new officials ignoring old debts’; whether loans can be secured against ‘intellectual property’ rather than ‘mortgaging property’; and whether tendering processes can cease asking ‘who your father is.’ This paper examines the implementation outcomes of the Promotion of Private Economy Law since its enactment, focusing on core provisions concerning market access, financing support, fair competition, and property rights protection. It systematically analyses prominent issues and deep-seated obstacles encountered during legal implementation, while proposing targeted improvement recommendations based on the latest policy practices. This aims to provide legal support for advancing the high-quality development of the private economy.
I. Implementation Outcomes of the Promotion of Private Economy Law
(1) Progress in Implementing Market Access Provisions
Article 10 of the Promotion of Private Economy Law explicitly establishes the ‘non-prohibition means entry’ principle: ‘The State implements a unified national negative list system for market access. Economic organisations of all types may enter fields not specified on the list on an equal footing in accordance with the law.’ This provides fundamental legal safeguards for private enterprises' market participation rights.
Policy implementation has yielded significant results. On 24 April 2025, the National Development and Reform Commission, in conjunction with the Ministry of Commerce and the State Administration for Market Regulation, jointly issued the Market Access Negative List (2025 Edition). The number of items on the list was reduced from 117 in the 2022 edition to 106, a reduction of 11 items. Compared with the first edition of the list in 2018, the reduction reached 30%, reflecting the reform orientation of continuously easing market access restrictions.
Breakthroughs in key sectors have yielded fresh progress. In nuclear power, private enterprises' equity participation has risen to 10% for the first time, disrupting the traditional monopoly structure. Within commercial aerospace, Hainan Wenchang International Space City achieved a pioneering breakthrough from zero to one, with private enterprises emerging as vital drivers of innovation within the industry. This fully validates the practical efficacy of relaxed market access policies.
Fairness in tendering has markedly improved. Following the law's implementation, private enterprises' market participation in tendering has significantly enhanced. From January to April 2025, the contract award rate for private enterprises increased by 5 percentage points year-on-year. For projects under 100 million yuan, private enterprises secured over 80% of contracts, with the market vitality of small and medium-sized private enterprises continuing to expand.
(2) Implementation of Financing Support Provisions
Chapter III of the Private Economy Promotion Law, ‘Promotion of Investment and Financing,’ establishes systematic regulations to improve the financing environment for private enterprises. Article 23 requires financial institutions to ‘develop financial products and services tailored to the characteristics of the private economy in accordance with market-oriented and sustainable principles.’ Article 25 explicitly states that ‘a multi-tiered capital market system shall be improved to support qualified private enterprises in obtaining direct financing through equities, bonds, and other means on an equal footing,’ thereby forming a comprehensive legal framework for financing support.
Alongside steady growth in loan disbursements, the allocation of credit resources has been continuously optimised. Substantial reductions in corporate financing costs have alleviated operational pressures on private enterprises.
The government-backed financing guarantee system is progressively maturing. The Ministry of Finance and five other departments jointly issued the Administrative Measures for the Development of Government-backed Financing Guarantees, clarifying the primary focus of policy-backed financing guarantee institutions. This has established a three-tier organisational structure comprising the National Financing Guarantee Fund, provincial re-guarantee institutions, and local financing guarantee institutions. This framework achieves nationwide coverage at the municipal level and full coverage at the county level, with guarantees supporting small businesses and agriculture constituting no less than 80% of the total, providing robust credit enhancement support for private enterprises.
Direct financing channels continue to broaden. In the bond market, private enterprises issued bonds worth 3.34 trillion yuan in 2024, marking the first positive growth since 2020 and a return to net financing. This significantly enhances the complementary role of direct financing to indirect financing.
(3) Implementation Status of Fair Competition Provisions
Chapter II of the Promotion of Private Economy Law dedicates a section to the fair competition system. Article 11 stipulates that ‘People's governments at all levels and their relevant departments shall implement the fair competition review system; policy measures concerning the production and operation of business entities must undergo fair competition review.’ Article 14 explicitly states that ‘except as otherwise provided by law, public resource transactions such as tendering and bidding, and government procurement shall not restrict or exclude private enterprises,’ thereby establishing legal guidelines for fostering a fair competitive market environment.
The fair competition review system has been comprehensively implemented. Regions have continuously strengthened the construction of fair competition review mechanisms, extending the scope of review to cover the entire policy formulation process. This has effectively curbed the abuse of administrative power to exclude or restrict competition, playing a crucial role in standardising administrative conduct and maintaining market order. As a key supporting system to the Private Economy Promotion Law, the Fair Competition Review Regulations are regarded as a core tool for breaking down the ‘glass door’ of hidden barriers, creating an institutional environment of fair competition for private enterprises.
Fairness in government procurement has significantly improved. Regions actively implemented legal requirements, with areas such as Liaoning Province ensuring equal participation of all business entities in government procurement through strict enforcement of negative lists for market access and special campaigns to eliminate market access barriers. The share of government procurement awarded to private enterprises has steadily increased.
Antitrust enforcement has been progressively strengthened. The State Administration for Market Regulation has launched a special campaign targeting the abuse of administrative power to exclude or restrict competition. This initiative focuses on addressing four prominent issues: restricting enterprises' autonomous relocation, impeding the flow of goods and factors of production, obstructing cross-regional operations, and establishing local protectionist barriers. Concurrently, random inspections have been conducted in the public welfare sector for antitrust enforcement and fair competition reviews. Key monopoly cases have been investigated and prosecuted in accordance with the law, leading to the continuous optimisation of market competition order.
(IV) Implementation Outcomes of Property Rights Protection Provisions
Chapter VII ‘Protection of Rights and Interests’ of the Private Economy Promotion Law establishes a comprehensive property rights protection framework. Article 58 explicitly states that ‘the lawful rights and interests of private economic organisations and their operators, including personal rights, property rights, and operational autonomy, shall be protected by law; no entity or individual may infringe upon them.’ Articles 67 to 70 specifically establish mechanisms to safeguard payment of accounts receivable, providing systematic legal safeguards for the protection of private enterprises' rights.
Protection of personal and property rights continues to strengthen. The law explicitly safeguards the personal rights of private enterprise operators, including their reputation, honour, privacy, and personal information, forming a tripartite protection system encompassing personal rights, property rights, and operational autonomy. This provides private enterprise operators with stable development expectations and a sense of security. As the fundamental law for the equal protection of the private economy, the Promotion of Private Economy Law effectively complements the Civil Code, rendering the rules for protecting the rights and interests of civil entities more targeted and operational.
The mechanism for safeguarding payment of accounts receivable has begun to yield results. On 28 March 2025, the State Council executive meeting approved the Action Plan for Accelerating and Intensifying the Clearance of Overdue Enterprise Accounts, launching a nationwide unified debt clearance campaign. The revised Regulations on Ensuring Payment of Small and Medium-sized Enterprises further stipulate that government agencies, public institutions, and large state-owned enterprises shall not mandate audit results as the basis for settlement, and prohibit forcing SMEs to accept non-cash payment methods such as commercial bills. This has effectively curbed the issue of overdue payments.
Unprecedented strengthening of intellectual property protection. Article 33 of the Law on the Promotion of the Private Economy establishes a dual-track system for protecting original innovation and punishing infringement, explicitly stating that ‘efforts to protect intellectual property rights shall be intensified, and a punitive damages system for infringement shall be implemented.’
Mechanisms for protecting trade secrets have been continuously refined. In June 2025, the State Administration for Market Regulation launched the third ‘Enterprise Trade Secret Protection Capacity Enhancement Service Month’ campaign, focusing on enterprises' rights protection demands and intensifying enforcement efforts against trade secret infringements. The professionalisation and standardisation of trade secret protection continue to advance.
In light of this, the implementation of the Private Economy Promotion Law has injected robust momentum into the development of the private economy, with key indicators showing positive trends: enterprise scale continues to expand, with private economic entities reaching 185 million by the end of July 2025, accounting for 96.38% of all business entities; private enterprises numbered 56.707 million, representing 92% of all enterprises; Employment absorption capacity has steadily strengthened. By the end of April 2025, private enterprises accounted for 79.4% of total enterprise employees contributing to pension insurance, establishing themselves as the primary channel for employment. The role of private enterprises as innovation drivers has become increasingly prominent. They accounted for over 92% of national high-tech enterprises and over 80% of national-level specialised, refined, distinctive and innovative ‘little giant’ enterprises. Achieving technological breakthroughs in fields such as 5G communications and new energy vehicles, private enterprises became the largest importer and exporter of high-tech products for the first time in 2024, with import and export values growing by 12.6%. More significantly, the implementation of the law has restored market confidence. The legal confirmation of the ‘two unwavering principles’ has provided private enterprises with stable development expectations, effectively unleashing the vitality of private investment.
II. Issues and Challenges in Implementing the Promotion of Private Economy Law
Although the Promotion of Private Economy Law establishes a foundational legal framework for the development of the private economy, numerous issues and challenges persist during its implementation, hindering the full realisation of the law's effectiveness.
(1) Enhancing the Operational Feasibility of Legal Provisions
The legislation contains an abundance of general principles with insufficient detail. As a foundational law, the Act prioritises establishing institutional frameworks and fundamental requirements, yet certain clauses lack concrete operational guidance. For instance, while the law sets out general provisions regarding pledge registration, valuation, transaction circulation, and information sharing for movable property and rights financing, it fails to specify concrete implementation standards and operational procedures, rendering practical application difficult.
Supporting regulations require urgent refinement. Implementation challenges include insufficient awareness, uneven publicity coverage, gaps in supporting systems, and inconsistencies in enforcement. Particularly in property rights protection, inadequate supporting regulations create lingering concerns for enterprise investment and innovation, undermining the law's effectiveness.
Legal coordination mechanisms remain underdeveloped. The Promotion of Private Economy Law requires coordination with existing legislation such as the Civil Code, Company Law, Securities Law, and Anti-Monopoly Law. For instance, Article 20 mandates differentiated supervision for micro and small enterprises, yet the rigid non-performing loan tolerance thresholds stipulated in the Commercial Bank Law conflict with such differentiated policies. Further clarification of operational standards is needed to resolve the ‘reluctance to lend’ dilemma.
(2) Significant Disparities in Local Implementation
Policy implementation faces pronounced bottlenecks. Certain support measures encounter transmission inefficiencies at the grassroots level, preventing policy dividends from reaching private enterprises in a timely and full manner. Instability in the policy environment and insufficient transparency have increased enterprises' institutional transaction costs, undermining policy effectiveness.
Local protectionism persists. Certain regions exhibit a tendency towards ‘local protection,’ resulting in low litigation success rates and enforcement difficulties for private enterprises operating outside their home regions. Issues such as distorted policy implementation and delayed execution in areas like investment incentive disbursement, contract fulfilment, and payment settlement undermine a fair competitive market environment.
Discrepancies in enforcement standards remain pronounced. In judicial practice and administrative law enforcement, local protectionism, inconsistent adjudication criteria, and divergent legal application have resulted in suboptimal property rights protection outcomes. Malpractices such as arbitrary fees and fines, unlawful cross-regional enforcement, and profit-driven law enforcement persist, undermining legal authority and uniformity.
(3) Insufficient awareness and application capabilities among market entities
Legal awareness and dissemination remain low. Research indicates that some private enterprise operators lack in-depth understanding of specific provisions in the Private Economy Promotion Law, have insufficient recognition of rights and remedies granted by law, and demonstrate weak capacity to utilise legal means for rights protection.
Awareness and capability for rights protection require enhancement. When confronted with unfair treatment, some enterprises choose to endure due to unfamiliarity with rights protection channels, concerns over high costs, or doubts about effectiveness. This phenomenon of ‘daring not to defend rights, nor knowing how to defend rights’ diminishes the law's deterrent effect and practical efficacy.
The conversion efficiency of policy dividends remains low. Owing to information asymmetry and complex application procedures, many private enterprises fail to fully comprehend and benefit from the policy support provided by the law. The conversion efficiency of policy dividends requires improvement.
(IV) Deep-seated institutional and systemic barriers remain unresolved
The notion of prioritising public over private interests persists. Traditional mindsets perpetuate implicit discrimination in resource allocation, market access and policy support, leaving private enterprises facing unequal treatment in competition with state-owned enterprises and undermining the implementation of competitive neutrality.
The principle of competitive neutrality remains inadequately implemented. Despite legal provisions mandating fair competition, both explicit and implicit barriers persist—including ‘glass doors’ and ‘spring doors’ in industry access, equity restrictions in specific sectors, and cumbersome approval procedures—which constrain private enterprises' market participation.
Structural financing contradictions are pronounced. Despite notable improvements in credit allocation and financing costs, financial services remain inadequately tailored: credit product innovation for asset-light technology enterprises lags, supply chain finance coverage is limited, and numerous small and medium-sized private enterprises are excluded from core enterprise credit chains, with risk pricing mechanisms failing to function effectively.
The tension between compliance costs and innovation investment is becoming pronounced. Strengthened legal protections for intellectual property and data compliance have driven annual compliance cost growth of 12% for SMEs. Meanwhile, private enterprises allocate only 6.8% of their investment to fundamental research—3.2 percentage points below the national average—creating a practical dilemma where compliance pressures stifle innovation.
III. Implementation Safeguards and Improvement Pathways for the Private Economy Promotion Law
Refining the implementation mechanism of the Private Economy Promotion Law constitutes a systematic endeavour requiring coordinated efforts across multiple dimensions—legislative techniques, supporting policies, enforcement mechanisms, and oversight safeguards—to enhance the law's operability and effectiveness.
(i) Optimisation Pathways at the Legislative Technique Level
Accelerate the development of supporting regulations. Promptly formulate the Implementation Regulations for the Promotion of the Private Economy Law to refine operational standards for legal provisions; introduce management measures for the negative list on market access, clarifying adjustment procedures, oversight mechanisms, and access criteria and processes for private enterprises; establish detailed rules for fair competition reviews to standardise assessment criteria, procedures, and accountability mechanisms, thereby constructing a private-economy-friendly regulatory framework.
Enhance the precision of judicial interpretations. The Supreme People's Court should promptly issue judicial interpretations for the application of the Private Economy Promotion Law, translating principles such as ‘fair competition’ and ‘equal protection’ into concrete adjudication rules. Emphasis should be placed on clarifying legal application standards in areas including market access, financing support, and property rights protection, thereby providing explicit guidance for judicial practice.
Refine the legal liability framework. Addressing the current ‘soft’ nature of liability provisions, specify standards for administrative penalties and civil compensation, clarifying the legal consequences of violations such as market access restrictions, financing discrimination, and unfair competition to enhance deterrence.
Establish a mechanism for dynamic legal assessment and revision. Implement a biennial evaluation system for the law's effectiveness, integrating assessments with socio-economic development and the practical realities of private enterprise growth. This will enable timely identification of issues and formulation of revision proposals, ensuring the law's adaptability and timeliness.
(2) Pathways for Enhancing the Policy Support Framework
Establish a differentiated support matrix. Develop a dynamic, modular support system tailored to enterprises' lifecycle stages, industry risk profiles, and regional development phases:
- For start-ups: prioritise first-purchase incentives and R&D tax credits;
- For growth-stage enterprises: focus on loan interest subsidies, credit enhancement guarantees, and equipment upgrades;
- For mature enterprises: emphasise M&A restructuring, direct financing, and internationalisation services.
Refine Credit Remediation Mechanisms. Enhance tiered disciplinary systems for credit breaches and establish clear remediation protocols, specifying conditions, procedures, and grace periods. Integrate public credit platforms with financial institutions' information channels to prevent enterprises from enduring prolonged developmental setbacks due to isolated credit lapses.
Strengthen fiscal and tax policy support. Optimise the tax incentive framework, increasing tax relief for innovative technology enterprises and specialised, refined, distinctive, and novel private firms. Establish a private enterprise development fund prioritising technological innovation, transformation, upgrading, and market expansion. Refine government procurement policies to ensure equitable participation quotas for private enterprises.
Optimise financial support policies. Establish a risk compensation mechanism for loans to private enterprises, providing appropriate compensation to financial institutions for losses incurred on such loans. Promote financial product innovation to expand the coverage of intellectual property pledge loans and supply chain finance. Improve the multi-tiered capital market system to broaden direct financing channels for private enterprises. Implement differentiated regulatory policies for small and micro enterprises to enhance the precision of financial services.
(3) Standardised Pathways for Implementation Mechanisms
Establish a comprehensive policy transmission mechanism. Construct a closed-loop system encompassing ‘policy decoding – implementation tracking – outcome feedback’ to translate regulations into actionable guidelines for enterprises, bridging the ‘last mile’ of policy delivery to ensure swift and direct access to policy benefits.
Refine diversified dispute resolution mechanisms. Fully leverage the mediation role of industry associations and chambers of commerce by establishing specialised dispute resolution platforms for private enterprises. Optimise arbitration and litigation procedures to reduce rights protection costs and enhance dispute resolution efficiency.
Establish cross-departmental coordination mechanisms. Create a private economic development coordination body led by principal government officials to integrate policy formulation and implementation, preventing policy conflicts. Establish inter-departmental information-sharing mechanisms to enhance policy execution synergy and efficiency.
Strengthen grassroots enforcement capacity. Enhance legal training for frontline enforcement personnel to improve their understanding and application of the Private Economy Promotion Law; implement an enforcement accountability system to rigorously pursue responsibility for inadequate or unlawful enforcement actions; refine enforcement oversight mechanisms to standardise enforcement practices and safeguard the legality and fairness of enforcement.
(IV) Pathways for Strengthening the Oversight and Safeguarding System
Enhancing the oversight functions of people's congresses. People's congresses at all levels shall conduct supervision over the implementation of laws through means such as law enforcement inspections and special work reports. The Standing Committee of the National People's Congress shall annually receive reports from the State Council on the implementation of the Promotion of Private Economy Law, organise special law enforcement inspections, and promptly rectify issues arising during implementation.
Leveraging Judicial Oversight. Procuratorial organs shall establish specialised oversight mechanisms for cases involving private enterprises, issuing appeals, corrective opinions, and procuratorial recommendations in accordance with the law to address issues such as selective law enforcement and local protectionism, thereby ensuring the uniform and correct implementation of the law.
Refining Social Oversight Mechanisms. A complaint and reporting platform for private enterprises shall be established to facilitate oversight channels. Media, social organisations, and the public shall be encouraged to participate in oversight, fostering a positive societal environment where all sectors collectively advance the implementation of the law.
Establish a third-party evaluation mechanism. Commission professional institutions to conduct third-party assessments of the law's implementation effectiveness, with results made public to provide scientific basis for legal revisions and policy optimisation.
(V) Drawing on International Experience and Institutional Innovation
Comprehensively implement the principle of competitive neutrality. Establish a competitive neutrality review system and integrate it throughout the entire policy formulation process; refine the government procurement system to ensure equal participation for enterprises of all ownership types; strengthen anti-monopoly enforcement to prevent state-owned enterprises from abusing their market dominance, thereby guaranteeing private enterprises equal treatment in accessing factors of production and market entry.
Introduce provisions for prosecutorial public interest litigation. The Promotion of Private Economy Law shall explicitly establish a prosecutorial public interest litigation system, granting prosecutorial authorities the power to initiate public interest litigation against acts undermining equal protection, fair competition, or otherwise harming national interests and public welfare, thereby strengthening judicial safeguards for legal implementation.
Refine the bankruptcy protection system. Drawing on international experience, establish a restructuring protection mechanism for private enterprises. Grant restructuring buffer periods to enterprises facing financial difficulties but possessing development potential, thereby preventing market entities from exiting due to short-term hardships and stabilising market expectations.
Establish expedited rights protection channels. For high-frequency disputes involving private enterprises, such as overdue payments and intellectual property infringements, create specialised mechanisms featuring priority acceptance, accelerated adjudication, and time-bound resolution. This will reduce the cost of rights protection and enhance its efficiency.
In summary, the promulgation and implementation of the Private Economy Promotion Law signifies that China's private economy has entered a new phase governed by the rule of law. Since the law's enactment, significant achievements have been made in areas such as relaxed market access, improved financing environments, safeguarded fair competition, and strengthened property rights protection, laying a solid foundation for the high-quality development of the private economy. However, challenges remain that require concerted efforts to address, including insufficient operational feasibility of the law, disparities in local implementation, inadequate awareness among stakeholders, and systemic institutional barriers.
Refining the implementation mechanism of the Private Economy Promotion Law necessitates: strengthening legislative coordination between supporting regulations and the law itself; establishing differentiated, targeted policy support systems; ensuring uniform standards in enforcement mechanisms; constructing multi-tiered oversight networks for supervision and safeguards; and drawing upon international best practices for institutional innovation. Only through such measures can the law's institutional efficacy be fully unleashed, fostering a stable, equitable, transparent, and predictable legal environment for private economic development.
The private sector serves as a vital force in advancing Chinese-style modernisation and constitutes a crucial foundation for high-quality development. With the deepening implementation and continuous refinement of the Private Economy Promotion Law, the private sector will undoubtedly demonstrate enhanced vitality and creativity, making greater contributions towards realising the Chinese Dream of national rejuvenation. The crux lies in implementation; success hinges on execution. Only through sustained, concerted efforts can the law take root and bear fruit across China, allowing the innovative wellspring of the private sector to flow freely and its creative vitality to flourish.
When the United States reshaped global supply chains through the ‘exclusive subsidies’ of the CHIPS and Science Act from August 2022, and when the European Union invoked the Foreign Subsidies Regulation to scrutinise Chinese corporate acquisitions from July 2023, the rule of law within China's private sector became not merely a domestic governance issue but a ‘second front’ in global institutional competition. The quality of implementation of the Private Economy Promotion Law will determine whether we can transform the ‘scale advantage’ of 185 million market entities into an ‘institutional advantage,’ and whether we can possess the flagship of a ‘private enterprise fleet’ in the next wave of globalisation.
Making the law the ‘universal passport’ for the private economy, and ensuring the ‘Two Unwavering Commitments’ become the ‘Chinese solution’ that transcends economic cycles—this is the ‘institutional marathon’ we must win amidst a century of transformation!
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