China issues legal guidelines to support private business

BEIJING (Reuters) – China’s highest court on Tuesday issued guidelines to improve the legal environment for private business, state media CCTV said, suggesting renewed efforts by policymakers to support the private sector, a key growth driver.

The country’s private sector is struggling to revive from COVID-19 curbs and a wide-ranging regulatory crackdown that targeted sectors from technology to private tutoring, weighing on the recovery of the world’s second-biggest economy.

The government announced in July plans to shore up the sector, including extending tax and fee support targeting smaller businesses but confidence among private businesses has not shown meaningful improvement.

The guidelines issued by the Supreme People’s Court, emphasized the legal protection of private firms and the “personality rights” of entrepreneurs, according to CCTV.

In order to improve the public’s perception of the private sector, the guidelines said authorities would crack down on behaviours including slandering, disparaging or smearing private firms and entrepreneurs and misleading the public online to attract attention, CCTV reported.

Authorities will also crack down on infringements on the legitimate rights and interests of private firms, CCTV said, citing the guidelines.

The guidelines also stressed the need to expand financing channels for small and medium-sized private firms and vowed to deal with illegal loans.

China is seeking private investment for 4,894 major projects with total investment of 5.27 trillion yuan ($723 billion), after private investment shrank 0.7% in the first eight months of this year from a year earlier.

Despite policymakers’ efforts, many private enterprises face a harsher reality at the local government level, S&P Global said in a report on Monday.

Local governments struggling to balance budgets tend to favour cash-generating state-owned enterprises over their private sector competitors, S&P Global said.

($1 = 7.2925 Chinese yuan renminbi)

(Reporting by Ellen Zhang and Kevin Yao; Editing by Emelia Sithole-Matarise)