From Legislation to Implementation: A Step Forward for Fair Competition
On August 1, 2025, the Fair Competition Review Regulation came into full effect in China, barely two months after the landmark Private Economy Promotion Law took effect on May 20. This regulation is widely seen as a critical supporting measure to combat local protectionism and dismantle hidden barriers that have long hindered private enterprises. While the Promotion Law provides a "charter of rights" for private businesses, the Review Regulation serves as a "list of prohibitions" for government actions. Together, they signal a decisive shift from policy-driven support to rule-of-law-based governance in China's private sector.
Key Breakthroughs: Moving Beyond Self-Review to Enforceable Standards
The Fair Competition Review Regulation distinguishes itself by introducing a more robust enforcement mechanism. Previously, fair competition reviews relied heavily on self-assessment by policy-making bodies, which often resulted in superficial compliance. The new regulation mandates cross-departmental coordination mechanisms at the county level and above, and clarifies that market supervision authorities are responsible for implementation. It also enumerates specific prohibitions, such as restricting the free flow of goods and factors across regions, excluding non-local enterprises from public procurement and bidding, and granting preferential policies to selected companies without just cause.
These measures directly target the "revolving doors" and "glass ceilings" that private firms have long complained about. For instance, local governments sometimes set unreasonable requirements—like minimum registered capital or years of operation—that effectively bar non-local private companies from competing. Under the new regulation, such practices are subject to correction and accountability. For private enterprises, this is not merely a legal formalization; it translates into concrete market opportunities.
Opportunities for Private Enterprises: Unlocking a Unified National Market
The deeper significance of the Regulation lies in its role in building a unified national market. For years, local protectionism and market fragmentation have forced private companies to navigate a patchwork of divergent rules, raising transaction costs and stifling expansion. By curbing discriminatory practices, the regulation allows private firms to compete on merit across the country, rather than expending resources on cultivating local relationships.
In sectors such as renewable energy and the digital economy, where private companies are often at the forefront of innovation, the impact is particularly pronounced. Previously, local governments might favor homegrown champions to safeguard local tax revenue and jobs. With the Regulation strictly enforced, market access is expected to become more transparent and rules-based. Private firms can now enter new markets with greater confidence, expand their operational footprint, and allocate resources more efficiently. The requirement for policy drafters to conduct fair competition reviews at the drafting stage is another win, as it prevents discriminatory policies from being introduced in the first place.
Synergy of Legal Frameworks: The Dual Engine Effect
The Private Economy Promotion Law establishes the principle of fair competition, while the Fair Competition Review Regulation provides the procedural teeth to enforce it. Together, they form a dual-engine mechanism that reinforces each other. The Promotion Law mandates a unified negative list for market access; the Regulation ensures local policies do not subvert that list. This alignment offers private enterprises a stable, transparent, and predictable institutional environment—critical for long-term investment and innovation.
Nevertheless, effective implementation requires robust supervision and accountability. Private enterprises should be able to report policy documents that violate fair competition rules, and market supervision authorities must act on those reports. Looking ahead, it is essential that local governments issue detailed implementation guidelines and increase the transparency of enforcement cases to build credibility and deterrence.
Conclusion: Fair Competition as the Best Business Environment
The Fair Competition Review Regulation marks a major milestone in China's efforts to foster a level playing field. The rule of law is the best enabler of business, and fair competition is its economic embodiment. For private enterprises, this is not just a policy dividend but a durable foundation for growth. When no company needs to rely on special connections and success is determined solely by product quality and innovation, China's economic dynamism will be unleashed. Qiting Industrial will continue to monitor the implementation of these policies and stand alongside private enterprises in embracing a new era of fair competition.