Modern skyscrapers and a bull sculpture in the business district of Guiyang, China

A view of towering modern skyscrapers in the business district of Guiyang, China, under a clear blue sky. In the foreground, a bronze bull sculpture is set against the backdrop of sleek, glass-faced buildings and green landscaping. By MDL.

Economy

China’s Private Sector Gets Boost: New Policies to Solve Long-Standing Business Issues

China signals stronger private sector support; aims to improve business environment and address concerns.

byAndres Castro

September 23, 2025, 9:28 AM

Executive Summary

China’s NDRC has acknowledged significant gaps in the business environment for the private sector, signaling potential for stronger policy support to stabilize market sentiment.

Key improvements called for include strengthening property rights protection, regulating law enforcement practices (like curbing abuse of administrative discretion and profit-driven fines), and enhancing government services.

Given the private sector’s crucial role in China’s economy (over 60% GDP, 80% urban employment), the official’s remarks suggest Beijing may be preparing more robust measures to address long-standing issues and revitalize investor confidence.

The Story So Far

China’s private sector, which accounts for over 60 percent of the country’s GDP and 80 percent of urban employment, has consistently faced challenges including limited market access, preferential treatment for state-owned enterprises, arbitrary application of fines, and issues with property rights protection. These long-standing grievances have significantly dampened market sentiment and investor confidence, despite previous legislative attempts to address them. Consequently, top economic planning officials are now acknowledging these persistent “gaps” and signaling a potential for more robust policy support to foster a more equitable and predictable business environment, aiming to stabilize the economy and revitalize private enterprise.

Why This Matters

The acknowledgment from China’s top economic planning agency regarding persistent issues in the private sector environment, coupled with calls for stronger policy support, signals Beijing’s potential intent to roll out more robust measures. This could lead to improved investor confidence, a more equitable business landscape, and ultimately contribute to stabilizing market sentiment and fostering economic growth, given the private sector’s crucial role in the Chinese economy.

Who Thinks What?

Wu Xiaoyan, director general of the NDRC Centre for the Promotion of the Business Environment, believes there is significant room for improvement in China’s business environment and that stronger policy support, including better protection of property rights and regulated law enforcement, is needed to stabilize market sentiment and revitalize investor confidence.

Private sector entrepreneurs consistently argue that they face issues such as limited market access, preferential treatment for state-owned enterprises in financing, and the arbitrary application of fines and punitive measures by local law enforcement.

China’s top economic planning agency has signaled a potential for stronger policy support for the private sector, acknowledging that significant room for improvement remains in the country’s business environment. Wu Xiaoyan, director general of the National Development and Reform Commission (NDRC) Centre for the Promotion of the Business Environment, stated in an article published Tuesday in the People’s Daily that despite recent legislative efforts, gaps persist in meeting the demands and expectations of non-state firms, presenting an opportunity to stabilize market sentiment.

Addressing Business Environment Gaps

Wu’s article specifically called for several key improvements, including strengthening the protection of property rights and regulating law enforcement practices affecting enterprises. The official also advocated for the development of diversified dispute resolution mechanisms and a general enhancement of government services and conduct.

These concerns have been frequently voiced by entrepreneurs in recent years, particularly regarding the realm of law enforcement. Wu emphasized the necessity of curbing the abuse of administrative discretion, preventing profit-driven fines, and ending unauthorized cross-regional enforcement by local authorities.

Economic Significance of the Private Sector

The private sector plays a crucial role in China’s economy, contributing over 60 percent of the gross domestic product and accounting for more than 80 percent of urban employment. However, business owners have consistently raised issues regarding limited market access and preferential treatment for state-owned enterprises in obtaining financing.

Complaints have also centered on the seemingly arbitrary application of fines and other punitive measures by local law enforcement. Beijing now has a clear opportunity to address these long-standing issues and revitalize investor confidence, according to Wu.

Outlook for Policy Support

The acknowledgment from a senior economic official suggests that Beijing may be preparing to roll out more robust measures to support private enterprises. This comes even after the passage of a law earlier this year aimed at ensuring equal legal treatment and other protections for non-state firms.

Key Takeaways

The ongoing dialogue between policymakers and the private sector underscores the government’s recognition of the sector’s vital contribution to economic growth and stability. The official’s remarks indicate a potential policy window for further initiatives aimed at fostering a more equitable and predictable environment for private enterprises in China.