China’s private firms given legal recourse with new law

With the passage of a law designed to bolster China’s private economy, Beijing’s frequent shows of rhetorical support for businesses face a litmus test as the legislation is set to come into force on May 20.

Observers and entrepreneurs are closely following the implementation of the Private Economy Promotion Law to determine whether the measure has teeth. Of particular interest is how the law will impact the ability of firms to take local-level governments to court, and how it will protect the private sector from fines that have long been considered arbitrary and profit-driven.

“The new law has clear-cut provisions on curbing administrative powers,” said Rui Meng, an economics professor at the China Europe International Business School in Shanghai. “Thus, entrepreneurs can make better use of it in litigations, especially in legal cases against a local government.

“It’s also hoped that courts will be more willing to accept such cases and adjudicate them more fairly.”

The 78-article law, passed on Wednesday by China’s top legislature, is the first explicitly created for this purpose. And it has been hailed by state media as evidence that Beijing is walking the walk after oft-repeated pledges to revitalise the non-state economy.

The law forbids the use of administrative measures to intervene in economic disputes, as well as unscrupulous, profit-driven fine collections and asset seizures.

South China Morning Post