China's draft law prohibits arbitrary fines on private enterprises

BEIJING -- Chinese lawmakers on Monday began deliberations on the draft private economy promotion law, which adds new provisions prohibiting arbitrary fees and fines on private enterprises.

The draft law was submitted on Monday to an ongoing session of the Standing Committee of the National People's Congress, China's top legislature, for a second reading. The first reading took place in December 2024.

The draft bans the forced collection of funds or material donations from private enterprises and specifies that multiple inspection items of the same inspection target should be consolidated whenever possible or included within the scope of cross-departmental joint inspections.

The second draft also includes provisions requiring the State Council and local people's governments at or above the county level to regularly report to the standing committees of the people's congresses of their corresponding level on the promotion of the private economy.

It also requires relevant industry associations and chambers of commerce to fulfill their coordinating and self-regulatory roles in accordance with laws, regulations, and their charters. They are expected to promptly reflect industry demands and provide services in areas such as information consulting, training, market expansion, rights protection, and dispute resolution for private companies and entrepreneurs, per the draft.