A view of Beijing's CBD area. [Photo/VCG]

China has taken a decisive step toward bolstering its private sector by starting to draft a law on promoting the private economy, marking the latest step in boosting business confidence and revitalizing the growth of the world's second-largest economy, analysts said on Thursday.

They said that this legislative effort will not only improve the overall business environment but also address the pressing concerns of private enterprises, providing practical solutions to the challenges they face.

While the forthcoming law signals a promising shift toward a more favorable legal framework for the private sector, analysts emphasize the need for continued efforts to address persistent challenges, including financing difficulties and higher business costs.

Their comments came as the Ministry of Justice, the National Development and Reform Commission, and the Legislative Affairs Commission of the Standing Committee of the National People's Congress jointly hosted a legislative work symposium on Wednesday, at which it was said that work has started on drafting the law to support the development of the private sector, and the legislative process will be accelerated.

"By initiating the drafting of the private sector promotion law, China aims to foster a more favorable environment for the development of private enterprises while providing robust legal safeguards for their healthy growth," said Bai Wenxi, vice-chairman of the China Enterprise Capital Union.

According to China Central Television, the symposium said the key focus will be placed on protecting private companies' property rights and the rights and interests of entrepreneurs in accordance with the law, ensuring their participation in market competition on a level playing field, equal access to factors of production, and the settlement of outstanding payments owed to small and medium-sized enterprises.

"This reflects the government's strong dedication to nurturing the private economy, with a specific emphasis on addressing the fundamental concerns of private enterprises," said Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation's e-commerce research institute.

"It signals a significant step toward creating a more transparent, stable and predictable business environment that ensures fair competition. These legislative measures will not only remove systemic barriers but also invigorate business dynamism and foster the advancement of new productive forces."

Hong said the private sector serves as a primary engine for economic growth, creating abundant job opportunities and substantially contributing to China's GDP.

"It plays a pivotal role in bolstering economic dynamism and facilitating transformation and upgrading, thanks to its robust innovation capacity and adaptable mechanisms."

Private companies, a key driving force behind China's economic ascent over the past decades, contribute more than 60 percent of gross domestic product, 70 percent of technological innovation, and 80 percent of urban employment, official data showed.

Wang Peng, a researcher at the Beijing Academy of Social Sciences, said that while private companies have benefited from a series of supportive government measures, they still face difficulties in terms of a lack of funds, barriers to market access and obstacles hindering fair competition.

He said the law would help to tackle the issues faced by private companies, saying that will significantly boost business confidence, further drive their innovative development, help attract more private investment and foster high-quality economic growth.

Looking forward, Wang said the country needs to better implement the existing supportive policies and roll out more detailed steps to bolster the private economy, including further tax and fee cuts and more measures to improve market access.

Zhao Jiazhen, executive director and co-chief executive officer of Chinese online discounter PDD Holdings, said the authorities have rolled out a series of supportive policies in recent years to bolster the development of the private economy, which gives the company a sense of satisfaction and has promoted its high-quality development.

Zhao, who attended Wednesday's legislative work symposium, suggested that in the process of drafting laws, greater attention should be attached to protecting the legitimate rights and interests of small and medium-sized manufacturing enterprises in their overseas expansion, and helping them to improve their technological innovation capacities in international competition and build their own brands with independent intellectual property rights.