Draft of the Private Economy Promotion Law stipulates: Strengthening the protection of the rights and interests of private entrepreneurs

Today (October 10th), the Ministry of Justice and the National Development and Reform Commission publicly solicited opinions on the "Draft of the Law of the People's Republic of China on the Promotion of Private Economy".

In terms of protecting rights and interests, Chapter VII of the draft stipulates that the implementation of restrictive measures such as restricting personal freedom and seizure, attachment, and freezing should be carried out in accordance with statutory authority, conditions, and procedures. It is prohibited to use administrative and criminal means to illegally intervene in economic disputes. It regulates law enforcement actions across different regions. In response to the issue of large enterprises paying accounts to small and medium-sized private economic organizations under unreasonable conditions, the draft specifically sets up provisions to address this social issue.

Expert interpretation: What are the highlights of the draft law on the promotion of private economy?

The formulation of the Law on the Promotion of Private Economy is an important deployment made at the Third Plenary Session of the Twentieth Central Committee of the Communist Party of China. The draft consists of 9 chapters and 77 articles, making provisions on fair competition, investment and financing, technological innovation, standardized operation, service guarantee, rights protection, legal responsibilities, etc., in order to better play the role of the rule of law in establishing a legal environment and social atmosphere conducive to the common development of various ownership economies including private economy.

In February this year, the Ministry of Justice and the National Development and Reform Commission jointly led the establishment of a legislative drafting task force composed of 17 central and state agencies to thoroughly implement the guidelines and policies of the Party Central Committee and the State Council on the development of the private economy. The task force organized expert studies, conducted field research, listened to opinions and suggestions from representatives of private enterprises, experts, and scholars, revised the draft multiple times, and then solicited opinions from 53 relevant central and state agencies and 31 provincial, autonomous region, and municipal people's governments. Nearly a thousand opinions from various parties were studied, absorbed, and adopted one by one, leading to the modification of the draft. After the Third Plenary Session of the Twentieth Central Committee of the Party, further modifications and improvements were made to the draft in line with the spirit of the plenary session.

Since the 18th National Congress of the Communist Party of China, the Party Central Committee has attached great importance to the development of the private economy, continuously promoting the equal protection of various types of economic entities in accordance with the law. Currently, there are over 55 million registered private enterprises, and the number of private enterprises listed in the Fortune Global 500 has increased from 6 in 2012 to 34. The private economy has become an indispensable force driving the economic and social development of our country.

From now on, the public can submit opinions and suggestions by logging on to the websites of the Ministry of Justice and the National Development and Reform Commission, sending emails, or mailing written letters. The deadline for public consultation is November 8, 2024.

The draft stipulates "fair competition" and highlights the principle of equal treatment

The Party Central Committee and the State Council attach great importance to promoting the development of the private economy. The Third Plenary Session of the Twentieth Central Committee of the Communist Party of China clearly stated the need to formulate the Law on the Promotion of Private Economy. What are the highlights of this draft for soliciting opinions? Expert interpretation below.

The Law on the Promotion of Private Economy is a fundamental law that promotes the sustained, healthy, and high-quality development of the private economy. The legislation implements the constitutional requirements of encouraging, supporting, and guiding the development of the non-public sector of the economy, adheres to the organic unity of equal treatment, promotion of development, standardized operation, and protection of rights. Chapters II "Fair Competition" and III "Promotion of Investment and Financing" of the draft highlight the principle of equal treatment, effectively ensuring that private economic organizations enjoy equal legal status, market opportunities, and development rights as other types of economic organizations Vice President of Renmin University of China, Wang Yi: In terms of fair competition, the draft of the Promotion of Private Economic Development Law stipulates that in addition to the negative list of market access, various economic organizations including private economic organizations can enter equally in accordance with the law; it also makes specific provisions on implementing the fair competition review system, regularly clearing market access barriers, and prohibiting restrictions or exclusions of private economic organizations in bidding and government procurement.

Support for participation in national major strategies and projects

In terms of improving the investment and financing environment, Chapter Three of the draft focuses on supporting private economic organizations to participate in national major strategies and projects, improving the market-oriented risk-sharing mechanism for financing of private economic organizations, and other aspects. At the same time, it specifies that investment and financing support measures should be implemented in accordance with the principles of equality and marketization under the premise of legality.

Chapter Four of the draft provides for supporting private economic technological innovation.

Wang Yi stated that in terms of supporting technological innovation, the draft contains a lot of specific and practical measures.

• Support for private economic organizations to participate in national scientific and technological projects;
• Support for capable private economic organizations to take the lead in undertaking major technological tasks;
• Opening up national major scientific research infrastructure to private economic organizations;
• Encouraging public research and development platforms, common technology platforms to provide equal services for technological innovation of private economic organizations, and promoting in-depth integration of industry, academia, and research.

The draft clearly establishes a smooth and effective communication mechanism between government and enterprises

The draft also emphasizes standardized guidance, stipulating that the production and operation activities of private economic organizations should comply with laws and regulations, not harm public interests; private economic organizations should improve governance structures and management systems, regulate the behavior of operators, establish independent and standardized financial systems, and prevent financial fraud.

Vice President of Renmin University of China, Wang Yi: The draft is committed to optimizing service guarantees. It clearly establishes a smooth and effective communication mechanism between government and enterprises. When formulating laws, regulations, and policy measures closely related to the production and operation activities of business entities, it should focus on listening to opinions, efficiently and conveniently handling enterprise-related matters, and improving talent incentives and service guarantee policy measures.

The draft stipulates strengthening the protection of the rights and interests of private entrepreneurs

In terms of rights protection, Chapter Seven of the draft stipulates that the implementation of restrictive measures such as restricting personal freedom and seizure, detention, and freezing should be carried out in accordance with statutory powers, conditions, and procedures. It prohibits the illegal intervention in economic disputes through administrative or criminal means and regulates law enforcement actions in different regions.

Addressing the issue of large enterprises setting unreasonable conditions for payment to small and medium-sized private economic organizations, the draft includes specific provisions to respond to this social issue.

Vice President of Renmin University of China, Wang Yi: Emphasizing that large enterprises should reasonably agree on payment terms and timely pay accounts when purchasing goods, projects, services, etc., from small and medium-sized private economic organizations. They should not make receiving third-party payments a condition for paying accounts to small and medium-sized private economic organizations. This provides a clear legal basis for effectively resolving the issue of "back-to-back" clauses through judicial means in the future Combining information from Wall Street Journal and CCTV News.