(Yicai) Oct. 11 -- The Chinese government has published a draft law to promote the long-term, healthy, and high-quality development of the private economy, with the aim of boosting investor confidence and driving innovation.

The 77-article draft of the Private Economy Promotion Law was released yesterday on the websites of the Ministry of Justice and the National Development and Reform Commission and is open for public consultation through Nov. 8.

As the country’s first basic law on the private economy, the draft is intended to create a better environment for fair competition, private investment, and technological innovation as well as protect the rights and interests of private enterprises, boost market confidence, and stabilize market expectations, according to an NDRC official.

Private businesses play an important role in China's economic growth, accounting for a large share of employment, innovation, and gross domestic product. But concerns have arisen in recent years about the regulatory environment, uneven competition, and barriers to market access for private firms. The Private Economy Promotion Law aims to address these.

Market competition and legal protection of private business rights are the core of the new draft law, Zhi Xiangdong, vice chairman of the All-China Federation of Industry and Commerce and chairman of cybersecurity firm Qi An Xin Technology Group, told Yicai.

The law focuses on improving market access for private businesses and ensuring fair competition, which will effectively resolve many of the issues hindering development of the private economy, said Teng Tai, director of the Wanbo New Economy Research Institute.

Once the law is enacted, some of the irregular enforcement and regulatory practices affecting private firms will be prohibited, improving the business environment for them, boosting confidence, buoying market vitality, and reversing the economic downturn, Teng told Yicai.

Under the new law, all entities, including private businesses, will be allowed and guaranteed equal entry in areas outside of the negative list for market access. China will especially support private investment in strategic emerging and future industries, as well as in modern infrastructure and construction.

Private companies will be encouraged to take part in major national strategies and projects to establish a market-oriented risk-sharing funding mechanism, optimize the investment and financing environment for the private economy, and reduce institutional transaction costs, the draft law noted.

Moreover, the rights and interests of private enterprises will be strengthened as compulsory measures involving restrictions on personal freedom and the seizure and freezing of assets will be implemented in accordance with legal conditions and procedures.

The draft proactively responds to the overall expectations and concerns of private companies, said Guo Chunli, director of the Economic Research Institute at the Academy of Macroeconomic Research. It is a “key step” in helping the private economy foster long-term confidence, enhance internal momentum, and unlock innovative potential, Guo added.

Editor: Futura Costaglione