Formulate a Private Economy Promotion Law; support capable private enterprises in taking the lead in undertaking major national technological breakthrough tasks, and further open major national scientific research infrastructure to private enterprises...

The "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reform and Advancing Chinese Modernization" (hereinafter referred to as the "Decision"), reviewed and adopted at the Third Plenary Session of the 20th Central Committee of the Communist Party of China, explicitly states that China will "adhere to the principles and policies of creating a favorable environment and providing more opportunities for the development of the non-public sector of the economy," and proposes a series of specific measures to support the better development of private enterprises.

　　Optimizing the business environment: Formulating a Private Economy Promotion Law

A sound business environment is the necessary soil for the development and growth of the private economy and is directly related to the vitality of the market economy.

Earlier this year, a legislative symposium on the Private Economy Promotion Law, jointly held by the Ministry of Justice, the National Development and Reform Commission, and the Legislative Affairs Commission of the Standing Committee of the National People's Congress, made clear that drafting of the Private Economy Promotion Law had already begun and that the legislative process would be accelerated. The "Decision" once again mentions "formulating a Private Economy Promotion Law," which will further implement the optimization of the business environment at the legal and institutional level, ensure that private enterprises participate in market competition on an equal footing, and promote the healthy development of private enterprises.

There are urgent practical considerations for formulating this law. It is both an affirmation of the important current economic status of private enterprises and a positive response to public calls for legislation.

Li Jin, chief researcher of the China Enterprise Research Institute, pointed out that in recent years China's private economy has played a positive role in stabilizing growth, promoting innovation, increasing employment, and improving people's livelihoods. But it should also be noted that some fields impose "invisible thresholds" on private enterprises, which to some extent restricts the space for private enterprises to participate. Formulating the Private Economy Promotion Law will legally ensure that private enterprises enjoy equal treatment in market access, fair competition, legal protection, and other aspects, and will provide them with a more stable and predictable development environment.

From the perspective of legislation, China currently has dedicated laws concerning foreign-invested enterprises and state-owned enterprises, but there is not yet a dedicated law on private enterprises. Calls in society for formulating a Private Economy Promotion Law have existed for a long time.

Liu Junhai, a professor at the Law School of Renmin University of China, emphasized that formulating the Private Economy Promotion Law is a true "reassurance pill" for stimulating the vitality of private enterprises. In recent years, central and local policies and measures supporting private enterprises have played a positive role in stabilizing private enterprises' confidence in development. However, due to the lack of a Private Economy Promotion Law, the shelf life of these "reassurance pills" is relatively short, and the frequent use of "reassurance pill" policies will also lead to "drug resistance" in the private economy. Therefore, there is an urgent need to formulate a comprehensive dedicated law.

　　Improving long-term mechanisms: Supporting private enterprises in participating in major technological breakthroughs

In major technological breakthroughs, this door will be opened further to capable private enterprises.

The "Decision" proposes to thoroughly break down market access barriers, advance the fair opening of competitive infrastructure sectors to business entities, and improve long-term mechanisms for private enterprises to participate in major national project construction. Support capable private enterprises in taking the lead in undertaking major national technological breakthrough tasks, and further open major national scientific research infrastructure to private enterprises.

The time is right to support private enterprises in participating in major technological breakthroughs. In recent years, against the backdrop of increasingly fierce global commercial competition, more and more private enterprises have emerged on the world stage and become an important force driving scientific and technological innovation and industrial upgrading. For example, China's globally leading 5G communications technology and innovative implementation in the new energy sector all prominently feature private enterprises, fully demonstrating their strong strength in technological innovation.

Today, the opportunities and conditions for private enterprises to participate in major national technological breakthrough tasks are also gradually improving. Last year, the National Development and Reform Commission and other departments jointly issued the "Notice on Implementing Several Recent Measures to Promote the Development of the Private Economy," which proposed supporting private enterprises in participating in major scientific and technological breakthroughs and taking the lead in undertaking breakthrough tasks in fields such as industrial software, cloud computing, artificial intelligence, the industrial internet, gene and cell therapy, and new energy storage.

Li Wei, vice dean and professor of economics at Cheung Kong Graduate School of Business, pointed out that the orientation of these principles and policies means private enterprises will gain more room for participation and investment opportunities, which is a good thing for the country. The entry of more private enterprises will produce a "catfish effect" and bring more fair competition, which will not only help achieve more effective allocation of resources but also help enterprises improve development efficiency and promote the development of new quality productive forces.

In the view of Cai Zhibing, a professor at the Department of Economics of the Party School of the Central Committee of the Communist Party of China (National Academy of Governance), major national scientific research infrastructure is an important support for scientific and technological innovation. Further opening major national scientific research infrastructure to private enterprises will help lower the thresholds and costs for private enterprises to carry out major scientific research activities, attract and guide more qualified private enterprises to increase R&D investment, and thereby improve the overall capacity of China's innovation system.

　　Prescribing the right remedy: Solving difficult and expensive financing

Throughout the history of private enterprise development, difficult and expensive financing has always been one of the sticking points restricting their further growth. To solve the problems faced by private enterprises in development, the "Decision" conducts in-depth "diagnosis" and precisely "prescribes remedies," striving to better safeguard the development of private enterprises at the institutional level.

Specifically, the "Decision" not only proposes measures to "improve the policy system for financing support for private enterprises" on the key issue of difficult and expensive financing. At the same time, in order to regulate fee collection involving enterprises and ease the operating pressure and tight capital chains of private enterprises, the "Decision" also clearly states that China will "improve the long-term supervision of fees charged to enterprises and the system of laws and regulations for clearing arrears owed to enterprises." In addition, in response to the shortcoming that private enterprises generally have relatively weak credit ratings, the "Decision" also proposes "accelerating the establishment of a comprehensive evaluation system for the credit status of private enterprises and improving the credit enhancement system for private small and medium-sized enterprises."

Cai Zhibing believes that through the above measures it can be seen that the "Decision" further improves the policy system for financing support for private enterprises at the institutional level, which not only provides strong support for solving financing difficulties but also establishes a clear orientation in the financial system of supporting the development of private enterprises.

Li Wei said that in practice, the key to solving the problem of difficult and expensive financing is to eliminate various explicit and implicit "guarantees" that local governments provide to state-owned enterprises, so that private enterprises and state-owned enterprises compete on the same starting line. In terms of loan guarantees, it is necessary to optimize the assessment systems and standards of financial institutions, guide financial institutions to pay more attention to private enterprises' own qualifications, and let funds flow to where returns are highest, forming a more efficient financial system that nourishes the entire Chinese economy.