The Private Sector Promotion Law aims to advance high-quality development of the private sector, but concerted efforts remain essential for further progress given persistent challenges.

The law, which came into effect on May 20, underscores the deepening of rule of law reform in the market economy and reflects the nation's strong commitment to supporting the development of the private sector.

Accelerating the high-quality development of the private sector is an inherent demand for China's high-quality economic development and will help the country better cope with complex and severe external challenges.

The implementation of the law will significantly improve the legal environment for private enterprises, enabling them to receive greater policy support.

By elevating policies such as the fair competition review system, the negative list for market access, and the status of statutory provisions, the law continuously enhances equal protections, encourages fair competition and explicitly stipulates the lawful rights and interests of private economic organizations and their operators, including personal rights, property rights and autonomy in management.

The law supports the establishment of smooth and effective government-enterprise communication mechanisms, enabling the government to better understand the needs of private enterprises and provide targeted services.

It will broaden financing channels and facilitate funding access, as it mandates financial institutions to develop and provide financial products and services tailored to the private sector.

Measures already underway include pilot equity investment programs by financial asset investment companies, the establishment of private equity investment funds and the roll out of merger and acquisition loans for select technology firms, all expanding financing options for private enterprises.

Simultaneously, it enhances the alignment of credit supply and loan terms with the financing needs of the private sector, improving the accessibility and convenience of financial services.

The law encourages and supports private sector organizations in actively driving technological innovation, cultivating new quality productive forces and building a modern industrial system, so the law will further unleash the technological innovation potential of private enterprises.

It supports their participation in national key research and development programs and leads the undertaking of major national technological tasks, enabling private enterprises to deeply integrate into the national innovation system and enhancing their own sci-tech innovation capabilities.

Furthermore, the law clarifies rules for the distribution of gains from innovation, ensuring that the innovation achievements of private enterprises receive effective protections and reasonable returns, thereby stimulating their innovation enthusiasm.

It will facilitate market access and fair competition for the private sector, encouraging increased investment in strategic emerging industries and future industries. The legislation actively promotes the fair participation of private enterprises in public tendering, enabling them to enter various market sectors with greater freedom.

The law will accelerate the establishment and improvement of modern enterprise systems among private firms. It guides private enterprises in refining governance structures and management systems, conducting lawful operations and sound management, strengthening risk prevention, fulfilling social responsibilities and ultimately enhancing their overall competence and reputation.

China still faces challenges in accelerating the high-quality development of its private sector, including the establishment of market competition mechanisms, regulatory system development, rule of law construction and internal governance mechanisms of private enterprises.

These factors pose constraints to progress among private firms' tech innovation and industrial upgrading, investment, exports, enhancement of international competitiveness, employment as well as government tax revenue issues.

This requires joint efforts and coordinated cooperation from all relevant entities, including government, the judicial system, financial institutions, industry organizations and private enterprises to bolster development confidence.

Fiscal policy should enhance support for the development of the private sector. All market entities must enjoy equal rights in government tendering and centralized procurement activities.

The proportion of funding from ultra-long-term special treasury bonds and central budget allocations — directed toward advanced manufacturing, energy conservation and carbon reduction — should be appropriately raised to support competitive private enterprises.

For export-oriented private enterprises, the government can provide targeted support through tariff and cross-border logistics subsidies, while improving export tax rebate policies and simplifying tax refund procedures.

Monetary policy support for the private sector should be more precisely targeted. Comprehensive use of instruments, including interest rate cuts, reserve requirement ratio reductions, re-lending and rediscounting, should provide low-cost liquidity to small and medium-sized enterprises, alleviating their financing difficulties and high costs.

Monetary and fiscal policies should be coordinated to encourage financial institutions toward greater support for private enterprises through fiscal incentives and tax benefits.

The government should support private enterprises in expanding into more investment and consumption sectors.

Regarding investment, industrial policies should be formulated and refined. Private enterprise investment projects aligned with policy requirements shall receive funding support, loan interest subsidies, tax benefits or dedicated industrial guidance funds.

The government should guide and encourage private enterprises to participate in major national-level projects, appropriately lowering bidding thresholds for major infrastructure projects such as airport facilities, while allowing private construction firms to bid jointly with large State-owned enterprises.

In the consumption sector, the government should support private capital in actively participating in the construction and renovation of consumption venues such as shopping malls as well as investing in cultural tourism projects, in order to promote integrated development across commerce, tourism, culture and entertainment.

Private enterprises' overseas expansion deserves comprehensive support and safeguards.

Establishing legal service centers for private enterprises can help reduce internationalization risks by providing services such as overseas legal consultation and compliance guidance.

By strengthening bilateral and multilateral economic cooperation with other countries and regions while signing investment protection agreements, the government can provide safeguards for private enterprises' overseas investments.

The government can formulate policies to grant tax benefits and fiscal subsidies to private enterprises that establish modern enterprise systems and improve corporate governance structures, which will guide and encourage private firms to adopt modern corporate governance mechanisms, motivating them to actively enhance governance practices.

A multitiered financial services system for private enterprises should be improved to address their financing difficulties.

The establishment of risk-sharing mechanisms among financial institutions, government departments and guarantors to jointly bear private enterprise loan risks will boost lenders' willingness to extend credit.

Additionally, the government can support banks in providing professional financial advisory and financing services for private enterprises' merger and acquisition activities, while offering financing products such as acquisition loans.

Through periodic symposiums with businesses, the government needs to strengthen regular government-enterprise communication mechanisms, so as to deliver timely policy updates to private enterprises and promptly resolve relevant problems.

Further optimizing the rule of law environment for private sector development and strengthening judicial enforcement against monopolies and unfair competition will provide judicial guarantees for private enterprises' fair participation in market competition.

The writer is a council member of the China Chief Economist Forum and head of the Guangkai Chief Industry Research Institute.

The views do not necessarily reflect those of China Daily.