New legislation for China’s private sector economy

The Private Economy Promotion Law of the People’s Republic of China was adopted by the Standing Committee of the National People’s Congress on 30 April 2025, and took officially effect on 20 May.

The new law grants private enterprises equal legal standing and market opportunities alongside other ownership forms, such as State-Owned Enterprises (SOEs). The legislation acts in favor of fair competition practices for private firms, in terms of access to bidding, procurement etc. For example, Art. 10 provides for a nationwide unified negative list system for market access: private firms will be able to equally compete in any sector not included in the list.

Another important point is related to R&D schemes: private enterprises are encouraged to undertake major national science and technology projects, while entitled to receive from the state greater research infrastructure and data resources. The law also mandates government bodies and SOEs to honor payment obligations on schedule, with penalties for default.

Having faced for long-time discrimination and inequality of treatment compared to SOEs, private firms may find enhanced protection through the new legislation. However, as often occurs in the country, the actual safeguards offered by the law can only be evaluated against future enforcement mechanisms.