Editor’s Note: After a fast-tracked legislative process spanning just over a year, China’s national legislature, the Standing Committee of the National People’s Congress, approved the Private Economy Promotion Law [民营经济促进法] on April 30. During that time, it reviewed the bill at three consecutive sessions—in December 2024, February 2025, and April 2025—and published (only) the first draft for public comment. Following the Law’s second review, friend of the site and Senior Fellow at Yale Law School’s Paul Tsai China Center Jamie P. Horsley authored a commentary for the Brookings Institution, in which she argues:
The first draft . . . contains little new in terms of legal or policy initiatives, apart from its somewhat problematic definition of promoted private businesses. It restates existing policies and legal requirements that have failed to resolve the sector’s legal challenges, emphasizes political correctness, and seems unlikely to succeed on its own to substantially reassure private investors and spark entrepreneurial enthusiasm. [And] the draft notably excludes majority foreign-owned companies and maintains a segregation of the Chinese economy into state, [domestic] private, and foreign-owned sectors.
In this follow-up piece, Horsley highlights notable new clauses in the Law’s final version and identifies several measures that lawmakers could have incorporated to improve government compliance with the Law but ultimately did not.
By Jamie P. Horsley
China’s first “foundational” [基础性] law intended to support and regulate its crucial domestic private sector, the Private Economy Promotion Law (PEPL), was promulgated on April 30 and takes effect on May 20, 2025. In official commentary surrounding its drafting and adoption, authorities recognized that the private sector has faced “difficulties and challenges in terms of fair participation in market competition, equal use of production factors, obtaining investment and financing support and service guarantees, and protection of legitimate rights and interests,” due in large part, as the PEPL makes clear, to Chinese government failures to abide by legal requirements. Official commentary also asserted that the PEPL now provides a legal guarantee and institutional support for its “sustained, healthy, and high-quality development.” However, the final PEPL, like the earlier drafts discussed in my previous analysis, contains little new in terms of substantive legal requirements, protections, or policy. It rather serves to emphasize and fortify pre-existing laws—including the state Constitution—and policies that apply to, but have not been uniformly and fairly implemented with respect to, the private sector.
Continue reading “China’s New Private Economy Promotion Law: Good Intentions Meet Weak Government Accountability”
