HOU Qiyuan | Case Studies and Challenges in Protecting the Legitimate Rights and Interests of Private Enterprises and Entrepreneurs

      HOU Qiyuan  Researcher at the Institute for Global Governance and Development at Renmin University of China.

      l  The following views are compiled from HOU Qiyuan’s remarks at the 13th Biweekly Policy Analysis Meeting.

HOU Qiyuan, a researcher at the Institute for Global Governance and Development at Renmin University of China, identifies three key contradictions in the protection of the legitimate rights and interests of private enterprises and entrepreneurs:

Primary Contradiction: Tension between Administrative Uncertainty and the Need for Stable Enterprise Development.

In 2024, the growth rate of private investment continued to decline. Although the overall proportion of private investment remained above 50%, it had dropped by 14 percentage points compared to 2015. Particularly notable is that from the end of 2023 to mid-2024, the share of private investment even fell below the 40% threshold. A major institutional barrier weakening investment confidence among private enterprises lies in the lack of continuity and stability in local policies.

Secondary Contradiction: Conflict between Business Transformation Needs and Governance Structure Deficiencies.

Private enterprises are playing an increasingly vital role in high-end manufacturing and emerging technology sectors, assuming the role of key industry leaders. Sustained profitability requires transformation and upgrading, yet many private firms still operate under family-style governance structures where founding entrepreneurs retain absolute decision-making power. During generational succession, power struggles, technological disconnects, and cultural fragmentation may emerge. Though often manifesting as internal economic disputes, these issues pose systemic risks to long-term enterprise sustainability. In judicial practice, such disputes frequently lead to prolonged litigation, severely disrupting normal business operations.

Tertiary Contradiction: Imbalance between Cross-Regional Operations and Localized Rights Protection.

Small and medium-sized private enterprises, when expanding across administrative regions, often face systemic obstacles such as long cycles and inefficiencies in asserting their rights in other jurisdictions. The lag in cross-regional judicial relief mechanisms effectively impedes enterprise scale expansion and market development.

To address these contradictions, a three-tier institutional optimization framework is proposed:

First, elevate economic development to a central role in official performance evaluation systems, thereby enhancing the scientific formulation and continuity of policies, and establishing a long-term mechanism for property rights protection.

Second, improve the implementation mechanism of the Private Economy Promotion Law. It is crucial to be wary of the law’s excessive administrative orientation. Current drafts emphasize administrative dominance, which may weaken judicial checks on administrative power and exacerbate concerns among private enterprises about campaign-style governance. It is recommended that key provisions be integrated into the Civil Code to preserve the unity and authority of legal norms.

Third, unlike policy-based documents such as the “31 Measures to Promote the Private Economy”, legal texts should adhere to a rights-protection paradigm. They must avoid administrative language focused on “promotion”, which risks undermining the legal rigidity and binding power essential for effective legal protection.

（This article is based on HOU Qiyuan’s speech delivered on March 27, 2025. It is intended solely for academic exchange and does not represent the position of the National Academy of Development and Strategy at Renmin University of China.）