Rule of law to bolster private sector growth

Favorable environment, robust protection, more opportunities for entities promised

As the rule of law is vital for ensuring investors' confidence in the private sector, experts have called for the strengthening of legislation and improved judicial services to reassure businesses wanting to invest in China.

This sentiment was included as a major task in China's latest reform resolution, which was adopted in July at the third plenary session of the 20th Central Committee of the Communist Party of China. The resolution is aimed at further comprehensively deepening reform to advance Chinese modernization, and provides guiding principles in various fields for the next five years.

It clarifies that China will ensure that economic entities under all forms of ownership have equal access to factors of production in accordance with the law, compete in the market on an equal footing and are protected by the law as equals, enabling them to complement each other and develop side by side.

The resolution also requires the continued implementation of policies that help foster a favorable environment and create more opportunities for the development of the nonpublic sector, with the formulation of a private sector promotion law.

"The social significance of enacting a specialized law to promote the private sector cannot be underestimated," said Miao Yinzhi, a law professor at Nanjing University in Jiangsu province, in an article published in Beijing News last month. Such a law will give people confidence and stimulate private entities to develop and invest, he said.

The private sector can be a new force in advancing Chinese modernization and a key foundation for high-quality growth, Miao said, noting that the sector's prosperity is related to not only employment and consumption but also the quality of people's lives.

"The efforts of private enterprises in the industries of communications, the internet, the digital economy, electric vehicles and household appliances have benefited us a lot," he said.

Through legislation, the current measures and policies to help private enterprises develop can be made stronger, which will provide the enterprises with more robust protection, he added.

Li Hongfen, president of the Intermediate People's Court in Jiaozuo, Henan province, emphasized the important role of the courts in protecting the legitimate rights and interests of private enterprises.

Li said that in addition to upholding the principle of giving equal protection to every market entity, regardless of whether they are State-owned or private, judges should increase exchanges with enterprises to learn their legal needs and difficulties.

"The rule of law is crucial to ensuring high-quality development of the private sector," she said, adding that any new problems must be found and dealt with quickly to improve risk awareness among companies tackling disputes.

On Aug 14, judges from the court in Jiaozuo met with a number of local private entrepreneurs, lawyers and scholars to listen to their advice on protecting the private sector, with discussions revolving around amending the Corporation Law as well as solving intellectual property cases and bankruptcy.

Underscoring that the rule of law will lift the business environment, Liu Yong, vice-president of the court, called for judges to optimize legal services while dealing with disputes involving private enterprises and help solve their business difficulties through judicial means.

He also called for establishing a work mechanism with local industrial and commercial associations to increase information sharing, and to lower the cost for private enterprises in litigation and provide them with better education in the law.

Wang Jianyuan, deputy head of the China Cultural Chamber of Commerce for the Private Sector, said the "development of the private sector cannot be separated from legal support", and praised the efforts made by judicial authorities in this regard over the past few years.

In July last year, the Supreme People's Court, China's top court, disclosed the details of 11 cases involving private enterprises, showing the judiciary's determination to serve the sector's growth.

In one case, Xiaomi turned to the Beijing Internet Court after an individual posted potentially libelous comments online about the tech company and its executives.

After a preliminary investigation, the court determined that the comments were more than likely false and could damage Xiaomi's reputation. It issued a ban on the content and urged the individual to immediately delete the post.

"The ban order was useful in preventing any further damage to the private company, and also showed the judicial determination to crack down on those who harm the right of reputation of enterprises," said Liu Guixiang, an official of the top court, adding that the order helped build a sound environment for the development of the private sector.

Chinese prosecutors have also increased efforts to take steps against people who disturb the order of the market and interfere with the development of the private sector.

According to data released by the Supreme People's Procuratorate in early August, around 20,000 people were accused of disrupting market order from January to June, up 52.7 percent year-on-year.

In the same period, 5,827 people were prosecuted for embezzlement, bribery and other corruption-related crimes by using their former key work positions in private enterprises, an increase of 41.1 percent compared with the previous year.