The enactment of “Private Sector Promotion Law” on April 30, represents a significant milestone in its economic development strategy of China. With implementation set from the 20^th of this month, this legislation marks the first comprehensive legal framework designed to support the private sector. Spanning nine chapters and 78 articles, the law positions private enterprises as a fundamental force in China's economic future, offering a blend of opportunities in all sectors.

The private enterprises’ role in China's economy is of paramount importance. Private enterprises have long been the backbone of the country’s development. By introducing the dedicated law, China stresses the importance of private sector, aiming to ensure its sustainable growth and integration into the national economic framework.

One of the most transformative aspects of the law is its emphasis on creating a level playing field for all enterprises. Article 3 guarantees equal legal status and market opportunities for private enterprises, addressing historical concerns about policy bias and unequal treatment. By implementing a nationwide market access negative list system (Article 10), the law opens up previously restricted sectors, allowing private enterprises, including foreign-affiliated entities and Hong Kong firms, to compete on equal footing. This regulatory clarity is expected to reduce local protectionism and foster fair competition, a critical step toward modernizing China's market economy.

Investment and financing incentives outlined in Articles 21 to 26 provide further opportunities for private enterprises. The law encourages participation in high-tech sectors, infrastructure development, and traditional industries undergoing technological transformation. Hong Kong enterprises, known for their international expertise and advanced technologies, are well-positioned to apply these provisions. Moreover, the allowance for alternative financing methods, such as intellectual property and receivables as collateral, offers greater flexibility to startups and tech-driven companies, reducing financial barriers and promoting innovation.

The law also prioritizes technological innovation as a cornerstone of economic progress. Articles 27 to 33 emphasize the integration of private enterprises into national research projects and encourage collaboration with academic and scientific institutions. This policy aligns with China’s broader vision of becoming a global leader in innovation and provides Hong Kong firms with unparalleled opportunities to partner with mainland entities. Such collaborations, particularly within the Guangdong-Hong Kong-Macao Greater Bay Area, are expected to drive regional economic integration and global competitiveness.

Equally significant is the legal protection offered to private enterprises. Articles 58 to 70 explicitly safeguard property rights, operating autonomy, and intellectual property. By implementing punitive measures for IP infringement and offering robust dispute resolution mechanisms, the law enhances investor confidence. For Hong Kong enterprises in Mainland China, these protections mitigate operational risks and provide a stable environment for long-term growth.

The government’s commitment to service-oriented governance is another highlight. Article 44 mandates the establishment of streamlined communication channels between enterprises and government agencies, ensuring that private enterprises' concerns are addressed efficiently. Article 48 further simplifies administrative procedures, reducing the time and costs associated with market entry and exit. These measures are particularly advantageous for entrepreneurs and small enterprises, enhancing their ability to navigate China’s complex regulatory landscape.

The Private Sector Promotion Law introduces some short-term challenges that enterprises must address to realize the long-term benefits for the country’s economic development (Article 36). Its strong emphasis on compliance with labor, environmental, and financial regulations mandates enterprises to adopt more structured and transparent governance models. For Hong Kong firms, which operate under a different regulatory framework, this shift may require adjustments in operations and management practices. However, these changes align with global best practices for corporate governance and sustainability. By fostering accountability, resilience, and adherence to international standards, the law positions private sector to thrive in a more regulated and equitable economic environment, ultimately contributing to their long-term success.

In conclusion, the Private Sector Promotion Law signals a new era for China’s economic development, reaffirming the central role of private enterprises in the nation’s future. For Hong Kong enterprises, the law offers a wealth of opportunities—from expanded market access to enhanced legal protections—while also setting higher standards for compliance and governance. By embracing these changes and leveraging the policy advantages, Hong Kong enterprises can not only achieve their commercial objectives but also contribute to China’s broader vision of high-quality development and modernization. This legislation is more than a legal framework; it is a call to action for enterprises to innovate, collaborate, and thrive in a rapidly evolving economic landscape.

By Dr. Bankee Kwan

Member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) and the Permanent Honorary President and Past President of Federation of Hong Kong-Shanghai Associations

The views do not necessarily reflect those of Orange News.

Photo: Xinhua