Cover Story: China Writes First Legal Rulebook to Strengthen Its Vital Private Sector

China fast-tracks landmark law to iron out obstacles to growth of private businesses

China is fast-tracking a landmark law to bolster its vital private sector, as top leaders acknowledge the urgent need to restore business confidence amid mounting economic headwinds.

The Private Economy Promotion Law, China’s first authoritative law on the private economy, is to receive a crucial third legislative review this month — potentially paving the way for its passage. This caps a remarkably swift journey since drafting began just over a year ago.

The legislative push reflects Beijing’s effort to revitalize a sector responsible for more than 60% of GDP and 80% of urban jobs, but long plagued by challenges such as unequal access to resources, arbitrary penalties and inconsistent policy enforcement. The law seeks to codify guarantees of fair competition and strengthen legal protections for private businesses, aiming to provide a more stable operating environment than offered by government directives alone.

The accelerated timeline underlines its urgency: drafting began in September 2023,