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Efforts are being stepped up to remove legal hurdles hindering the development of China's 3.4 million private enterprises.
Officials with the Law Department of the All-China Federation of Industry and Commerce (ACFIC) said yesterday that some of the country's laws and regulations conflict with central government efforts to allow private enterprises achieve their potential.
The State Council freed-up operations of private companies, responsible for employing at least 47 million people, in a number of industries in February.

Directives allowed private companies to enter previously State-monopolized sectors like the railways, civil aviation and even national defence and also gave them easier access to bank loans.

"However, some laws and regulations, in effect, contradict the spirit of the cabinet's decision, and examples can be found everywhere," said an ACFIC official.

One example of the contradictions is that Interim Rules on Private Enterprises, released by the State Council in 1988, clearly bar private companies from the military industry and finance sectors. Under the new policy, private companies are allowed to bid for some military projects.

Corporate Law also says that only State-owned enterprises are allowed to manufacture "special products," such as weapons.

The Supreme People's Court's judicial interpretation in 1999, banning private companies from seeking investment from individuals, is also a case in point.

The ACFIC official, who preferred to be unnamed, said the federation is dispatching teams to seven provinces to find out how serious the problem is and what the best solution would be.

The federation is expected to submit proposals on amending relevant laws and regulations to both the central government and the law-making National People's Congress (NPC) after the survey is completed in June.