The vigorous growth of private businesses during the past two decades is partly the result of the country's consistent work to build a favorable legal environment for the non-public sector of the economy.

This is the conclusion reached by experts, lawyers and private entrepreneurs from all over the country, who came here to attend a forum with the topic of how to offer effective legal protection for private businesses.

Many of China's most important laws, such as the Constitution, Civil Code, Criminal Law, Corporation Law, Partnership Law as well the law on the promotion of small and medium-size businesses, have included clauses defining the development of private businesses.

Further legal improvements for the country's private businesses have come in 2004.

This March, clauses called "the state encourages, supports and guides the private economy" and "legal private property is not to be encroached upon" were added into the Constitution.

This June, the draft corporate bankruptcy law was submitted to the Standing Committee of the National People's Congress (NPC), China's top legislature, for a first hearing.

The proposed law would require all 8 million companies in China to follow a unified corporate bankruptcy law to withdraw from market if they fail.

"It means that China's SOEs, private enterprises and foreign companies will become equal competitors in the market economy," said Li Shuguang, Vice-President of the Postgraduate School of the China University of Political Science and Law.

On July 1, the Law on Administrative Licensing came into effect. Government intervention to the market was reduced, giving private businesses a more equal and efficient market environment in which to operate.

The amendment draft of Corporation Law, one of the most important laws for China's market economy, is expected to be submitted to the Standing Committee this October for a first hearing.

Jiang Ping, professor with the China University of Political Science and Law, participated in the consultation and discussion of the amendment draft. Jiang told Xinhua that the amendment draft includes clauses on dropping company's registered capital and reducing government intervention in the market, which will help private enterprises enter the market more easily.

"I have run my own business for almost 20 years and witnessed that government has stipulated more and more favorable regulations and policies to encourage private enterprise development," said Huang Jianlin, board chairman of the Suzhou-based Aoyute Silk Company. "Currently, I think private businesses enjoy equal status with foreign companies in Suzhou city."

"Although the legal environment for private businesses has been improved a lot, problems still exist," said Xu Yajun, a lawyer with Damingda Law Office. "For example, some local regulations and policies for non-public sector of the economy are always changeable, posing difficulties to safeguard interests and rights of private businesses."

Xu also pointed out that the current tax collection and tax exemption systems in most places of the country are more favorable for foreign companies than for private Cinese businesses, which goes against the equal competition principle.

In general though, he acknowledged that the continuously-improved legal environment has greatly promoted the development of private enterprise.

The newest statistics from the All-China Federation of Industry and Commerce show that the number of China's registered private businesses surpassed three million in 2003, an increase of 570,200 from the previous year. The registered capital of private enterprises amounted to 3530.5 billion yuan in 2003, up 42.61 percent from the same period last year.