China's second draft of the private economy promotion law has attracted widespread attention at the ongoing two sessions — the annual gatherings of the National People's Congress and the National Committee of the Chinese People's Political Consultative Conference.

The draft expands protection against arbitrary fees and fines imposed on private enterprises. Earlier, the draft law was submitted to the Standing Committee of the NPC, China's top legislature, for a second reading. The first reading took place in December 2024.

The second draft follows a high-level symposium on private enterprises held last month, which emphasized the significance of the private sector and signaled the country's commitment to fostering its healthy and high-quality development.

The second draft effectively translates the country's strategic goals of "building a high-level socialist market economic system" and "optimizing the development environment for the private economy" into actionable legal provisions. This is expected to provide robust protection for China's private economy.

Many NPC deputies and CPPCC National Committee members believe that the economy is in a critical period of transitioning from old to new growth drivers and rebuilding market confidence. The introduction of the private economy promotion law is expected to serve as a boost to the confidence of most private entrepreneurs.

China's private enterprises are not only a significant driving force of Chinese modernization but also a shining emblem of the country's high-quality economic development. On the global stage, they have demonstrated China's speed and strength, marking new heights for the country's economy through their actions.

However, they also face severe and complex external challenges, as well as insufficient domestic demand. Stabilizing market expectations has become a top priority for the government. A survey by the All-China Federation of Industry and Commerce revealed that 72 percent of private enterprises are most concerned about "policy instability". Legislation is seen as the fundamental solution to this concern.

Legislating the basic principles and policies for the private economy is of far-reaching significance for China's economic development. The policy direction taken will shape the future of more than 57 million private enterprises and entrepreneurs.

Through legislation, China can create a favorable business environment, break down market access barriers by ensuring equal rights, opportunities and rules, and remove institutional obstacles. By leveraging the stability and consistency of policies, the country can optimize the allocation of market resources, paving the way for the private economy to embark on a path of high-quality development.

ECONOMIC DAILY