Boosting private economy serves people
The Government Work Report delivered by Premier Li Qiang on Tuesday once again vowed to adopt policies to spur the growth of the private sector.
The private economy has made immense contributions to China’s economic development and accounts for a significant part of the country’s economy. In a modern socialist country like China, policies and regulations uphold a basic economic system where the State-owned sector plays a main role. Yet China’s encouragement, support and guidance for developing the non-public sector have been unwavering.
The drafting of a law to promote the private economy, which began on Feb 21, is a significant step toward boosting the development of the private sector. This is perhaps the highest-level measure to promote and protect the private economy, while it underscores a gap in the development of the private economy, a sentiment which can be traced back to the historical desire for economic equality.
In contrast, the initial funds for China’s private economy — better termed as “start-up capital” rather than “primitive accumulation” — were raised from within the socialist system for setting up enterprises, not by separating the means of production from workers. These funds came from family savings, community fundraising, bank loans, leasing, Stateowned enterprises’ reform, and intangible assets provided by different State departments, which had nothing do to with deprivation.
Without these measures, the private economy would not have reached its current state of development nor would China’s economy become the second largest globally. These are all reasonable and lawful practices in the initial stages of socialism, in line with economic laws.
From today’s perspective, some of the practices might seem legally grey, but progress needed to be made regardless of regulatory frameworks after the launch of reform and opening-up. German historian Friedrich List insightfully notes that technology and commerce move from one city to another, from one country to another, seeking freedom, safety and support.
In a market economy, laws are designed to regulate market players’ behavior and protect interests, including those of individuals and enterprises. At the heart of this system lies the protection of property rights. A market economy, characterized by transactions, necessitates clear and protected property rights as its foundation.
Commodities cannot go to the market and make exchanges of their own accord. That requires a guardian, the commodity owner. Without well-defined and protected property rights, fair trade cannot exist, and without trade, the luster of the market economy would fade.
A market economy also requires the protection of entrepreneurs’ rights. This includes the right to allocate resources and to lawfully earn income, as well as civil rights. While individual lawbreakers should be punished, it’s crucial not to disrupt the normal operation of businesses. The charm of a market economy lies in fair competition, which starts with the fair distribution of social resources. Without fairness at the outset, it’s difficult to achieve fairness in the subsequent stages.
The development of the private economy, at present, faces some major challenges, as its slowdown is impacting China’s overall economic growth. The intention behind the proposed law is to promote and protect the private economy. The law should be used to pave the road for the development of the private economy, support entrepreneurs’ passion for business, allow them to grow without worry, and help them contribute more to China’s economic development.
The essence of law lies in its punitive and operational nature. Thus it should not to be taken lightly. Violation of the private economy’s interests, possibly by departments representing public authority, should also be subject to litigation and punishment. There is also a need to establish the authority of laws to promote the private economy and emphasize that the private economy is an integral part of the national economy. The proposed law, once implemented, will be a legal milestone, which will truly help accelerate the recovery of the private economy.