An aerial drone photo taken on Jan. 8, 2024 shows robotic arms processing components for new energy vehicles at a private company in Changxing Economic and Technological Development Zone of Huzhou City, east China's Zhejiang Province. (Photo: Xinhua)

China's national lawmakers on Wednesday voted to adopt the country's first fundamental law dedicated to promoting the private sector, underscoring support for a key part of the world's second-largest economy, the Xinhua News Agency reported.

The private sector promotion law, passed at a session of the Standing Committee of the National People's Congress (NPC), will take effect on May 20, 2025.

The adoption of the private sector promotion law marks a milestone in the development of the nation's private economy, a major economic driver, since the beginning of reform and opening-up, a Chinese expert said, noting its importance as the country ramps up efforts to foster new quality productive forces.

The law consists of nine chapters and 78 articles, covering general provisions, fair competition, investment and financing promotion, technological innovation, standardized operations, protection of rights and interests, legal responsibilities, and more.

As the country's first foundational law dedicated to the development of the private economy, it marks a significant step forward. The law aims to further improve the environment for the development of the private sector and ensure fair market competition for all types of economic entities, according to Xinhua. 

The law also promotes the healthy development of the private economy and supports the comprehensive growth of entrepreneurs, the report said.

"Although various regulations and measures to support the private economy have been introduced over the years, this is the first time such recognition has been elevated to the level of national legislation," Li Changan, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics, told the Global Times on Wednesday. He noted that this move "carries important practical implications for promoting the private sector's development, guiding it along a law-based path, and improving its regulation and governance."

Furthermore, the private sector plays a vital role in the national economy, particularly in the digital era, where it actively drives new quality productive forces and fosters innovation and entrepreneurship, Li said.

During the drafting and deliberation process, lawmakers solicited public opinions through 54 legislative outreach offices and gathered broad feedback from private enterprises in various sectors, representing a vivid practice of implementing whole-process people's democracy in legislative work, according to the members of the NPC Standing Committee.

Li said the enactment of this law will help ensure a fairer competitive environment for private enterprises and further boost their enthusiasm for innovation and business creation.

China's private sector demonstrated strong resilience in the first quarter of 2025, with new business registrations rising steadily, according to a report released by the State Administration for Market Regulation on April 21.

In the first quarter, 1.979 million new private enterprises were registered, marking a 7.1 percent year-on-year increase - surpassing the average growth rate of the past three years. By the end of March, the number of registered private enterprises surpassed 57 million, accounting for 92.3 percent of all businesses nationwide, according to the report.

New quality productive forces have become a key highlight of China's private sector. In the first quarter, 836,000 new private firms were registered in the "four new economies" - new technologies, industries, business formats and models, accounting for more than 40 percent of new private enterprises.

The private sector promotion law holds great significance for the future development of China's economy, as the private sector currently constitutes a vital part of the national economic structure, particularly in employment and exports, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Wednesday.

"With legal protections now in place, any actions that harm private enterprises or the private economy can be addressed through legal channels, helping safeguard their rights and interests... This ensures that the legitimate interests of private businesses are fully respected," said Xi Junyang.