Positioning Needs Refinement: Perspectives and Suggestions on the Draft Private Economy Promotion Law (AI Translation)

定位有待完善：对《民营经济促进法》（草案）的感受和建议

[para. 1][para. 2] The 20th Central Committee of the Communist Party of China (CPC) decided to introduce a law aimed at promoting the private economy. On September 26, a Politburo meeting emphasized the creation of such legislation, leading to the release of the "People's Republic of China Private Economy Promotion Law (Draft for Public Comment)" on October 10, seeking public feedback. This will potentially be China's first comprehensive legal framework dedicated to spurring the private sector.

[para. 2][para. 3] The draft imbues new energy into the legislative landscape by integrating well-established phrases regarding economic development into national law for the first time. It aims to erase ambiguities surrounding sector dominance post-primary economic stages and focuses on equitable resource distribution between public and private sectors.

[para. 3][para. 4] The legislation proposes clear guidelines, embedding private economic advancement in national economic plans while advocating for open communication between the government and enterprises. It specifies roles for private entities in accessing public resources and delineates equal status and penalties across economic organizations.

[para. 4][para. 5] Explicitly, the draft ensures private entities equal rights to utilize production factors like capital and technology. It mandates fair treatment in areas like government funding, land use, and qualification assessments. Restrictions on seizures and penalties are outlined, aiming for transparency and fairness in legal and administrative practices.

[para. 5][para. 6] The law also safeguards against undue payment delays to private organizations and outlines detailed procedures for administrative inspections and legal protections, demonstrating a strong emphasis on operational transparency and ease of policy implementation.

[para. 6][para. 7] The draft delineates responsibilities and penalties for non-compliance, such as unfair competition practices, exclusion from tenders, and infringement on private rights. It also clarifies cross-regional law enforcement boundaries.

[para. 7][para. 8] However, there remains ambiguity in defining "private economy," particularly regarding who controls these entities. The draft's definitions could miscategorize certain enterprises, such as those with dispersed ownership or no individual controllers, questioning their placement outside the private sector.

[para. 8][para. 9] The draft law defines private economic organizations as those controlled by Chinese citizens, excluding state-owned and foreign-invested entities. This raises classification issues for enterprises with non-individual control structures, such as Huawei or companies without a clear controlling shareholder.

[para. 9][para. 10] Increasingly, companies have dispersed shareholder structures, like Ant Group and Gree Electric, which complicates their classification under the draft’s definitions, as the law's criteria do not account for modern corporate realities with split or diffuse ownership.

[para. 11][para. 12] To address these challenges, the draft suggests a revised definition that excludes foreign or state-controlled investment while incorporating entities that are not easily categorized under current definitions.

[para. 12][para. 13] This foundational legal innovation aims to secure economic fundamentals, enhance stability and foster long-term benefits. While it aligns with overarching economic goals, further refinements to the draft's definitions and classifications are needed to align with market realities.

[B] These reflections by a research consultant for the Guangdong Provincial Committee and a special research fellow at the Provincial Counselor's Office offer insights into the draft, aiming for constructive development in China's legal framework for the private sector.