In an effort to breathe life back into China’s troubled private sector, the country’s highest court has released comprehensive guidelines aimed at improving the legal environment for private businesses. The move signals a renewed commitment by policymakers to support this critical driver of economic growth.
The private sector in China has been grappling with the combined impact of COVID-19 restrictions and a sweeping regulatory crackdown, encompassing industries ranging from technology to private tutoring. These challenges have cast a shadow over the recovery of the world’s second-largest economy.
Government initiatives announced in July sought to bolster the private sector, including extended tax and fee support targeted at smaller businesses. However, confidence among private businesses has been slow to recover.
In response to these concerns, the Supreme People’s Court has issued guidelines that underscore the importance of legal protection for private firms and the “personality rights” of entrepreneurs, according to state media outlet CCTV.
These guidelines also emphasise the need to enhance the public’s perception of the private sector. Authorities have vowed to clamp down on behaviours such as slandering, disparaging, or smearing private firms and entrepreneurs and spreading misleading information online for attention.
One crucial aspect highlighted in the guidelines is the need to expand financing channels for small and medium-sized private firms, while simultaneously cracking down on illegal loans. This effort seeks to help businesses access the necessary capital for growth and development.
At present, China is actively seeking private investment for 4,894 major projects with a total investment value of 5.27 trillion RMB (723 billion USD). This move comes after private investment declined by 0.7% in the first eight months of the year compared to the previous year.
Overall, these guidelines underscore the government’s determination to support the private sector, a critical growth engine for the nation. The new guidelines should provide increased legal protection, enhance public perception, and expand financing opportunities, empowering private businesses and facilitating their growth in a challenging economic environment.