Economist Teng Tai Calls for Stronger Legal Backing for China’s Private Sector in New Milestone Law

Economist Encourages China to Strengthen Support for Private Sector Following Underwhelming Draft Legislation

Teng Tai argues that the proposed 'milestone' legislation should alleviate fears that private entrepreneurs in China are valued only during emergencies.

The inauguration of the inaugural fundamental regulation for the growth of the private sector marks a "significant" occasion, says Teng Tai, director and lead economist at the Wanbo New Economic Research Institute in Beijing.

Teng argued in a Tuesday post on Zhenghe Island's WeChat channel, a forum for private business owners, that the legal standing of private enterprises needs to be enhanced to convince them that Beijing's backing is not just a temporary measure.

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The draft, containing 77 articles, serves as a summary of recent policy initiatives aimed at increasing private sector trust in the economy. It was created to "address the concerns of various stakeholders," "ensure long-term stability in expectations," and aid in the "healthy growth" of private enterprises and their proprietors, according to a joint statement last week by the Ministry of Justice and the National Development and Reform Commission.

The proposal introduces policies to foster equitable market competition, improve the environment for investment and financing, promote private participation in scientific endeavors and technological advancements, and ensure that private enterprises adhere to the appropriate political orientation.

The text comes after the third plenary session held in July, which is a crucial meeting of the Chinese Communist Party where they outline the economic strategies for the coming five to ten years. During this session, party leaders agreed to implement a law aimed at engaging private business owners, as the nation faces a struggling economic rebound and increasing difficulties due to a technological conflict with the United States and its allies.

"The draft stated that the private sector plays a crucial role in the socialist market economy and is a key driver of China's modernization efforts."

Teng contended that the draft was inadequate and needed to acknowledge that the private sector is a crucial component and a "source of vitality," given that it accounts for 60 percent of government tax revenue and generates 80 percent of employment.