Private Economy, Public Priority

On February 24, Hunan Province convened a conference themed on advancing the private economy, launching a “year for enterprise services” initiative. It was Hunan’s first provincial-level conference held after the Spring Festival (Chinese New Year) holiday, which ran from February 15 to 23 this year.

In the previous two years, Hunan’s first conference after the Spring Festival centered on investment promotion. This year, under the broader framework of high-quality growth, the province has shifted its focus decisively toward the private sector—seeking to foster a more enabling business environment, strengthen market entities and generate renewed momentum for economic expansion.

Hunan’s approach is not unique. Provincial-level regions across China have convened similar meetings. Since 2023, Hebei Province has held its first conference after the Spring Festival with a consistent focus on improving its business environment. At the events, business people engaged directly with officials to discuss operational challenges and propose solutions—an approach that underscores service-oriented governance and enterprise-centered policymaking.

The Central Government has been working together with provincial authorities to improve the development environment for the private economy.

Large share of economy

Private enterprises now play an indispensable role in China’s economy. In Hunan, the significance of the private economy can be illustrated by a set of figures. According to official statistics, Hunan’s private sector contributes roughly 50 percent of provincial tax revenue, about 70 percent of provincial GDP, more than 90 percent of technological innovation outcomes in the province, over 90 percent of local urban employment and more than 90 percent of locally registered business entities. In 2025, the value added output of private companies in Hunan reached 3.8 trillion yuan ($540 billion), up 4.8 percent year on year. These companies also accounted for 65.2 percent of total investment during the year, ranking among the highest shares nationwide.

In Hebei, the private sector generated about 3.23 trillion yuan ($470 billion) in value added in 2025, accounting for 65.6 percent of provincial GDP and contributing 66.8 percent of overall economic growth—making it the province’s primary growth source, according to the Hebei Provincial Bureau of Statistics.

At the national level, in recent years, the private sector has contributed more than 50 percent of tax revenue, over 60 percent of GDP, more than 70 percent of technological innovation achievements and over 80 percent of urban employment, and makes up more than 90 percent of enterprises. Its position as the primary engine of innovation continues to strengthen. Private technology firms account for the majority of hi-tech enterprises in China and hold a substantial share of invention patents and new product output.

The sector’s global competitiveness has also advanced steadily. From 2012 to 2023, the import and export volume of private enterprises grew at an average annual rate of 11.1 percent, and their share of China’s total foreign trade expanded from roughly 30 percent to over 50 percent. Since 2019, private firms have become the country’s largest group of foreign trade operators, playing an increasingly prominent role in international economic engagement. These indicators collectively highlight the private economy’s function as the principal driver of high-quality development.

Optimizing the business environment

Provincial-level governments are innovating institutional arrangements and regulatory measures to safeguard the rights and interests of the private economy. In May 2023, Hebei became the first provincial-level region in China to implement a “dual-blind” public tender system, in which neither evaluation experts nor bidders know each other’s identities. The reform has been widely regarded as a meaningful step toward strengthening fairness and transparency in market competition.

Anhui Province and other regions have implemented a “quiet production period” for enterprises. Except in special circumstances such as those involving workplace safety, no routine inspections or other administrative activities that could disrupt normal business operations are permitted from the 1st to the 25th of each month.

In 2026, new local regulations promoting the private economy take effect simultaneously in provincial-level regions including Shandong, Hebei, Fujian and Gansu provinces, Tianjin Municipality and Inner Mongolia Autonomous Region. These regulations align with the private sector promotion law, which came into force in May 2025, and provide a long-term institutional framework for more than 100 million private market entities nationwide.

The law is China’s first fundamental legislation dedicated to promoting the private sector. Throughout the entire text of the law, the terms “equality,” “fairness” and “equal treatment” appear a total of 26 times, reflecting the principle of equality across all aspects and stages of work relating to the promotion of the private economy. It codifies legal provisions that ensure equal treatment and equal protection for the private sector, optimizing a stable, fair and predictable environment for private economic development. In doing so, it elevates many existing national policies supporting the growth of the private economy to become long-term, stable legal safeguards.

Fujian reinforces provisions related to fair competition, investment and financing facilitation, technological innovation and service support, extending implementation to the county level to leverage local economies as engines of broader development. It also encourages private economic organizations to make greater contribution to cross-Taiwan Straits economic integration.

Jiangsu Province, drawing on the concentration of innovation resources in the Yangtze River Delta and its established industrial strengths in machinery, electronics and automobiles, has integrated its manufacturing sector deeply into global value chains. Building on this foundation, Jiangsu’s draft regulation on promoting the private economy calls for enhanced collaboration with other regions within and beyond the Yangtze River Delta, strengthening cross-regional coordination in technological and industrial innovation to advance high-quality private-sector development.

Across China, the message at the outset of the new year is increasingly clear: Supporting and strengthening the private economy is not only a near-term economic priority but also a strategic foundation for sustainable, high-quality growth in the years ahead.