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Cyril Ip

China’s draft legislation to promote the private economy needs urgent refinements, including penalties for law-enforcement agencies overstepping their authority and infringing on the rights of businesses, a former State Council official has said.
Former deputy director of the industry, commerce and trade research department Chen Yongjie pointed out that entrepreneurs felt that clauses in the draft law were “insufficient”, as the sector faces “increasing external challenges” amid Donald Trump’s return to the White House.
The outline of the legislation, released on October 10, aims to revive business confidence, which has been hit by policy uncertainties and ambiguous behaviour by the authorities.
In the first four days of the month-long public consultation period about the legislation, the justice ministry received more than 1,000 proposals.
In a recent speech to the China Macroeconomy Forum, Chen, who is also deputy director of Beijing Dacheng Enterprise Research Institute, said a recent survey by his institute had found that more than half of the 56 entrepreneurs questioned felt the draft had not met expectations.
The sample size was “limited” but still had a “certain representativeness”, he added.
“The law enforcement responsibilities of relevant government departments should be clarified, and corresponding punitive clauses should be set to enhance the deterrent effect of the law,” Chen said in the speech, which was published on Friday.
His comments echo claims that entrepreneurs and private businesses have been victimised by wrongful law enforcement and judicial practices.
The current version of the law requires the authorities to clearly distinguish between economic disputes and economic crimes and to ensure acquittal or non-prosecution in cases that do not constitute a crime or which lack sufficient evidence. But some have questioned a lack of specifics.
Chen added: “Specific clauses should be added to protect the legitimate rights and interests of entrepreneurs, and restrictive measures on infringements should be clarified to avoid legal formalism or placebos.”
The draft law comprises 77 articles across nine chapters and seeks to codify key policies and practices underscoring equal treatment and protection for private enterprises while promoting regulated growth.
The law should “further emphasise the protection of entrepreneurs’ private property rights and personal rights in accordance with the law, eliminate arrests without evidence or illegal restrictions, and resolutely correct unjust, false and wrong cases,” Chen said, adding that stigmatisation of the sector should be prohibited.


The private economy’s slowdown has heavily contributed to China’s declining growth, Chen argued. He said the “only area” where private companies have performed “relatively well” was foreign trade, with their exports growing around 20 per cent between 2015 and 2023.
“This growth trend reflects the impact of cheap Chinese goods on the US and European markets, but with Trump’s re-election, the external challenges for private enterprises have intensified and the prospects are not clear,” Chen said.
Beijing has repeatedly pledged to support the sector amid the post-Covid economic slowdown. In September, China’s top economic planner Zheng Shanjie called private entrepreneurs “people of our own”, adding that the National Development and Reform Commission would “spare no effort to help your companies conquer the difficulties.”


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Chen Yongjie, a former State Council researcher, says a survey of entrepreneurs found half felt the proposed legislation was ‘insufficient’


Chen Yongjie, a former State Council researcher, says a survey of entrepreneurs found half felt the proposed legislation was ‘insufficient’.


China economy

China’s private sector

China’s private sector law needs to punish unjust law enforcement, ex-official says

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Chen Yongjie, a former State Council researcher, says a survey of entrepreneurs found half felt the proposed legislation was ‘insufficient’

Chen Yongjie, a former State Council researcher, says a survey of entrepreneurs found half felt the proposed legislation was ‘insufficient’