China's national lawmakers voted on Wednesday to adopt the country's first fundamental law specifically focusing on promoting the private economy, marking a significant step in revitalizing a sector that is key to growth and greatly boosting entrepreneurs' confidence and expectations.

The move has sent a strong signal that China places great emphasis on supporting the healthy and high-quality development of the private sector through legislation, in order to create a fairer, more dynamic business environment and address the pressing concerns of private enterprises, according to experts and company executives.

After more than a year in the legislative process, the private sector promotion law, passed at a session of the Standing Committee of the National People's Congress, the country's top legislature, will take effect on May 20.

The law, which comprises 78 articles in nine chapters, covers areas such as fair competition, investment and financing promotion, scientific and technological innovation, regulatory guidance, service support, protection of rights and interests, and legal liabilities.

For the first time, "unswervingly consolidating and developing the public sector and unswervingly encouraging, supporting and guiding the development of the nonpublic sector" and "facilitating the healthy development of the nonpublic sector and those working in it" are written into the law.

The law explicitly outlines the legal status of the private economy for the first time, with a clear stipulation that promoting the sustained, healthy and high-quality development of the private economy is a significant long-term policy of China.

The NPC Standing Committee's Legislative Affairs Commission said that China's private economy plays a pivotal role in propelling the country's economic development, fostering innovation, boosting employment and enhancing people's well-being. It stressed the necessity to promulgate the law to strengthen legal safeguards for the development of the private economy.

The introduction of the law is a milestone and shows that the country's emphasis on the private sector has been lifted to a new height, said Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation.

"The law not only consolidates the vital position of the private sector in China's socialist market economy, but also provides private enterprises and entrepreneurs with stable expectations and solid legal guarantees, which will help shore up their confidence and stimulate their enthusiasm for investment and innovation," Hong said.

Implementation of the law will create a fairer, more transparent and more predictable business environment for private enterprises, which will more equally be able to obtain resources and participate in market competition, Hong added.

Furthermore, legislative support will enhance the core competitiveness of private enterprises and bolster their sustainable, high-quality development, Hong said.

Private companies have become a key force behind China's economic ascent over the past decades. They contribute more than 60 percent of GDP, 70 percent of technological innovation and 80 percent of urban employment, official data shows.

Liu Dian, a researcher at Fudan University's China Institute, said: "The law marks a key step in improving China's market economy system and promoting diversified development. With the implementation of the law, we expect that it will effectively stimulate the vitality of private enterprises and encourage their broader participation in competition and cooperation, thereby contributing to overall economic growth and social progress.

"As an indispensable force in China's economic and social development, the private economy plays a vital role that should not be underestimated," he added. "It is not only a major source of employment and a key driver of technological innovation, but also a critical pillar in ensuring the stability of industrial and supply chains."

Liu pointed out that the private sector still faces challenges, including financing difficulties and market access barriers. He said that the authorities should focus on deepening financial system reforms, in order to broaden financing channels for private enterprises, and intensify tax and fee reductions to ease their burden.

Qi Xiangdong, chairman of Chinese cybersecurity company Qi-Anxin Technology Group, said he was very inspired by the adoption of the law on promoting the private economy, and he expressed strong confidence in the future growth of the private economy.

"As we are a technology enterprise with high R&D investment, this law has significantly boosted our confidence, enabling us to focus more on leading in technological innovation, playing a prominent role in driving industrial upgrade and demonstrating our strength in international competition," Qi said.

He noted that the law concentrates on solving practical difficulties and issues faced by private enterprises through improving investment and financing and fostering technological innovation, and its implementation will be conducive to alleviating the cash flow pressures of enterprises and accelerating the industrial application of technologies.

Cao Yin contributed to this story.

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