China's top legislature passed a bill aimed at boosting the private sector, in a symbolic move to rally entrepreneurs and shore up confidence as Beijing hunkers down for a "protracted" trade war with the US.
Lawmakers passed the private sector promotion measure at a Wednesday session of the Standing Committee of the National People's Congress, according to the Xinhua News Agency. The legislation will take effect May 20.
The law will, for the first time,e codify government policies on promoting the private sector, including the principle that such businesses should be treated equally to state-owned firms, Lou Qinjian, a spokesperson for the NPC said in March.
That means private companies should get equal market access to state-owned enterprises, as well as the same treatment on investment, financing and support for tech innovation. The law also includes a clause banning excessive fines and penalties against private companies.
Yet the measure lacks an enforcement mechanism to provide legal protections to ensure such rights, prompting scepticism from some critics that it would make a substantive change.
President Xi Jinping's government is ramping up efforts to reassure the private sector in a bid to safeguard economic growth that's been dogged by a property crash. The Chinese leader in February held a meeting with the country's top entrepreneurs including Alibaba's once-shunned co-founder Jack Ma, in a move seen as a signal that the era of regulatory crackdowns has ended.
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An escalating trade war with the US has made it even more important that Chinese companies are contributing to the economy, as Xi vows to "fight till the end" with Trump setting the stage for a protracted battle.
Liu Min, an official with a newly established bureau overseeing the private economy under the nation's top planning agency, said it is key for companies to "unify their thoughts and actions" with the central government's decisions amid rising external challenges, according to Xinhua.
