New law ‘will boost confidence of private entities and drive growth’

China’s newly introduced Private Economy Promotion Law will help private enterprises overcome the challenges they face, including difficulties in obtaining finance and an uneven business environment, according to leading economists.

Speaking at a recent event organised by the Centre for China and Globalization in Beijing, Huang Hanquan, head of the Chinese Academy of Macroeconomic Research, said: “The law will boost the confidence of private entities and drive their growth. It will undoubtedly have a significant impact on the private sector and reinforce the economic foundation for Chinese modernisation.”

Huang emphasized that the law focuses on removing institutional barriers and breaks new ground to benefit China’s private economy. The economist said it was the first time the legal status of the private sector has been clearly defined, and also the first time promoting the sustainable and high-quality development of the private sector has been explicitly stated as a long-term national strategy.

On the issue of fair competition, Huang said that the law strengthens market evaluation systems and enforces fair competition rules, ensuring that private enterprises can compete on a level playing field.

Wei Chu, dean of the School of Applied Economics at Renmin University of China, commented: “Enterprises say this law will protect their rights, promote operational standardisation, and encourage innovation, while also improving the quality of government services.”

Based on his academic research and a recent survey of private enterprises, Wei pointed out that many companies still face barriers in infrastructure, access to public utilities, fair competition, and market entry. He said the new law regulates government behaviour and responds directly to these longstanding concerns.

“The law facilitates the establishment of a market-oriented risk-sharing mechanism for private sector financing, enabling banking institutions and credit guarantee providers to expand cooperation with private enterprises,” said Wang Peng, a researcher at the Beijing Academy of Social Sciences.

This mechanism diversifies risk through market-based approaches and mitigates financial institutions’ concerns about lending to private enterprises, thus facilitating greater capital flow into the private sector, Wang said.

The more dynamic private enterprises become, the stronger their innovation capability will be, generating greater willingness to collaborate with foreign-funded enterprises, he added.

The law provides institutional support for private enterprises to overcome technological barriers and integrate into global value chains by strengthening overseas IP protection, said Wang.

The law also encourages private enterprises to take the lead in undertaking major national technological research projects, he said, adding that this innovative mechanism injects new impetus into the development of global industrial chains by reducing research and development costs and accelerating the commercialization of technological achievements.

The Private Sector Promotion Law took effect on 20 May 2025. It encompasses nine key areas including key problems such as fair competition, investment and financing incentives, sci-tech innovation and intellectual property rights protections.

The legislation aims to optimize the development environment for the private sector, ensure equitable market participation for all economic entities, and foster the healthy growth of both private businesses and private entrepreneurs, the government said.

China set to explore further collaboration with UK

China’s economy is moving in a positive direction and presents strong opportunities for bilateral collaboration between China and the United Kingdom, according to Christopher Hayward, chairman of the policy and resources committee of the City of London Corporation.

“The way in which the economy of China is moving at the moment is in a positive way,” Hayward said at the recent 2025 Lujiazui Forum in Shanghai.

He said that greater openness will benefit both sides. “The more that China can open up, the better that will be for the Chinese economy. And certainly, we in the UK will want to support that. Part of our discussions with the Chinese government through the China-UK financial dialogue are around that.

“China has a great future – one which the UK wants to do business with. We want to trade with China. We see that as a great benefit to both of our countries,” Hayward added.